THE MODERN 
FARM COOPERATIVE 

MOVEMENT 






('Hfc^SLA i;. SHt:H{.OCK 




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Book. 






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The Modern Farm Series 

By Chesla C. Sheelock 



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Published by 

THE HOMESTEAD COMPANY 

Des Moines, Iowa 



THE MODERN 
FARM COOPERATIVE 
- MOVEMENT 



BY. , • 

CHESLA C. SHERLOCK 

Author: "Vest-Pocket Lawyer", "Know Your Compen- 
sation Liability", "Modern Farmyard 
Buildings", etc. 



Published by 

THE HOMESTEAD COMPANY 

Des Moines, Iowa 






Copyrighted, 1922, by 

THE HOMESTEAD COMPANY 

All rights reserved 



OCT -7 72 



C1AG83585 



i) 

I 

\ 



To 

DANTE M. PIERCE, 

friend, counsellor and associate, 

who has cheered and guided 

me in this effort. 



PEEFACE 

The farm cooperative movement is not new. It 
is one of the old things appearing new to a great 
many people. The modern movement started some 
ten or fifteen years before the dawn of the Twen- 
tieth Century; it has steadily grown and the 
reason that it now appears new to the majority of 
business men and thinkers in this country is 
because it has just commenced to attain those pro- 
portions which demand national attention. 

The author has been more than casually inter- 
ested in the farm cooperative movement for sev- 
eral years past. His investigations of and per- 
sonal visits to outstanding farm cooperative asso- 
ciations in Minnesota, Wisconsin, Iowa and Mis- 
souri, were first undertaken to secure magazine 
material for Leslie^ s WeeMy and other periodi- 
cals. Since coming to Pierce 's Farm Weeklies he 
has been thrown into even closer contact with the 
movement and its leaders. 

There is a common thought given currency in 
regard to the farm cooperative movement which is 
entirely incorrect, and that is the thought that it 
is socialistic in principle. Socialism is popularly 
decried and denied in this country and is applied 



to practically every reform movement initiated. 
It has been applied to the farm cooperative move- 
ment in the same spirit. Many interests and indi- 
viduals having no knowledge of, or means to ac- 
quaint themselves of the facts, have assumed this 
attitude. 

The chief objection urged against socialism is 
that it destroys private initiative, deprives the 
community of competition as between individuals 
and industries and secures profits to be distribu- 
ted for the common good of all. In other words, 
the incentive to achieve for self is taken away. 

The farm cooperative movement incorporates 
nothing of this purpose. In fact, it is the exact 
reverse. Its central purpose is to distribute the 
earnings or savings it makes through more effi- 
cient and direct methods of distribution and mar- 
keting on a patronage dividend basis, which is to 
say that the individuals furnishing the most pat- 
ronage or business to the cooperative association 
secure the most in earnings, profits or savings, as 
one cares to designate them. 

It is merely a tool in the hands of the farmers 
and the producers to shorten the line from the 
farm to the consumer but, at the same time, pre- 
serve the essential features of the service now ren- 
dered by our marketing system. It seeks, as a re- 
ward for shortening these lines, a part of the 
savings thus effected; it contemplates no attempt 



to combine against the consumer and enhance 
prices — it is merely asking that the gap between 
the prices paid the producer and those paid by the 
consumer, be reduced. 

It is hoped that this volume will bring some- 
thing of the magnitude of the farm cooperative 
movement to the business man, the consumer and 
to the farmer himself. We have attempted to 
sketch the causes of unrest which gave birth to the 
movement, to give a glimpse of the magnitude of 
the local cooperative movement, and to outline 
the more recent step taken ; namely, the federation 
movement, much of which is still in the process of 
formation. 

There has been no partizan purpose in the 
writing of this book. The central purpose has 
been to present the facts. Any matters of belief 
occurring to the author have been placed in the 
last three chapters of the book, relating to the 
future of the movement. Of course, the reader is 
at liberty to formulate his own opinions concern- 
ing the movement, but we believe that he will be 
interested, at least, in these pages. 

Grateful acknowledgment is made to the many 
authorities quoted and to the many investigators 
in the employ of state and nation whose tables, 
charts and graphs are reprinted herewith. 

Chesla C. Sheklock. 

Des Moines, Iowa. 



TABLE OF CONTENTS 



PART I 

History and Causes 
Chapter Page 

I Mr. Farmer Gets Together 3 

II Farm Cooperation Today 13 

III History of the Movement 27 

IV Causes of Unrest 40 

V Orderly Marketing 55 

PART II 

The Local Movement 

VI Local Cooperatives Generally 73 

VII Local Elevators 80 

VIII Local Live Stock Shipping 96 

IX Local Dairy Marketing 109 

X Local Mills 122 

XI Other Local Movements 131 

PART III 

The Federation Movement 
XII The Minnesota Idea 153 

XIII The Equity Cooperative Exchange 162 

XIV The Minnesota Potato Exchange 170 



Chaptee Page 

XV National Live Stock Marketing 182 

XVI National Dairy Marketing 192 

. XVII The U. S. Grain Growers, Inc 208 

XVIII Other Federation Movements 224 

PART IV 

The Future 

XIX Political Aspects 245 

XX The Cooperative State 257 

XXI The Future of Cooperation 267 

APPENDICES 

A U. S. Grain Growers, Inc., Contracts 277 

B Personnel of Committees 306 

C Committee of Fifteen Report 311 

D Minnesota Potato Exchange Contracts 350 

E Shipping Association Form 359 

F Corporation Form Under Cooperative Law 367 



LIST OF ILLUSTRATIONS 



FiGtJKE Page 

1. Location of All Cooperative Organizations (1917) ... 23 

2. Number of Organizations by Class (1917) 24 

3. Comparison of Wholesale Prices 41 

4. Comparison of Prices Paid Farmers 49 

5. Increase in ' ' Spread ' ^ of Prices 52 

6. Beef Cattle and Beef Prices 52 

7. How Price Fluctuations Affect Farmer and 

Consumer 60 

8. How Fluctuating Prices Affect Horse Production . . 61 

9. Seasonal Production of Peas 63 

10. Cheese Production 64 

11. Cooperative Live Stock Shipping in Iowa 106 

12. Cooperative Live Stock Shipping in Wisconsin 107 

13. Potato Marketing Associations in Minnesota 173 

14. The Minnesota Potato Market 176 

15. Potato Price Fluctuations 177 

16. Did It Pat to Pool Wool in 1921? 230 



PART I 

HISTORY AND CAUSES 



CHAPTER ONE 

Mr. Farmer Gets Together 

Some years ago there was a wreck on an Iron 
Mountain train down in the Missouri Ozarks. 
A boulder dislodged itself from a hillside and 
crashed down upon the train. 

A farmer who w^as comfortably seated in the 
day coach suddenly found himself with his head 
jammed through the cushioned seat in front. 

He commenced to pray, and in a loud, excitable 
tone called upon the Almighty for help. 

A fat lady, who had been thrown to the aisle, 
arose with some difficulty. Her eye chanced upon 
the pilloried farmer. 

**Huh!^' she snorted, ^^why don't you try help- 
ing yourself I Th' Almighty's too durned busy to 
waste time on th' likes of you !'' 

At the risk of spoiling a good story, but for a 
purpose, we will add that the farmer extricated 
himself without difficulty, none the worse for his 
experience. 

For some years, in fact for decades, the Ameri- 
can farmer has been in a position similar to the 
good Missourian. He has been calling for help; 
and his appeals have fallen on unresponsive ears. 



4 The Modern Farm Cooperative Movement 

He has called upon large political parties; he has 
been greatly flattered by them, and, strange to say, 
after the votes were cast, has found himself out of 
€ourt. He has joined this or that movement in the 
hope that economic salvation might be in store for 
him. 

He has, in the parlance of the street, been will- 
ing to '^try anything once,'* in his frantic search 
for a solution to his problems. If some of you were 
amazed at the fact that hundreds of thousands of 
farmers joined the Non-partisan League at a fee 
of sixteen dollars each, and accomplished the over- 
throw of established political parties in two short 
years, do not fall into the error of classing them 
with the reds, radicals and revolutionists. 

It must be remembered that the Nonpartisan 
League offered something in the way of tangible 
results to the farmers, in a direction where they 
had been wanting ^ ' something done. ' ' The abuses 
of the interests controlling foodstuffs and mar- 
kets in the past, whether fancied or real, had 
brought about the feeling that the farmer was on 
the small end of the horn. 

Political demagogues helped along that feeling, 
just as they are doing today. No class in all these 
free and independent United States has been 
'roused to fury with the periodical regularity that 
the farmer has. Then he has been left to nurse 



Mr. Farmer Gets Together 5 

his sores as best he could. The farmer was safe 
ground for this brand of politician because he was 
not organized. He could do nothing after his 
votes had been cast. 

In fact, it has been a standing rule in politics 
and ^'big business '^ these many years to keep the 
farmer from getting anything like a representa- 
tive organization. Let him try it and the prover- 
bial *^ monkey wrench '^ appeared from some mys- 
terious source and his little pet organization broke 
up in discord, distrust, or sank to oblivion of its 
own accord. 

Full many a movement has come forth the 
past seventy years to lead the wanderers into the 
Promised Land, which have all whirled out into 
space on a mj^sterious tangent, or fizzled in the 
beginning. Those that survive are, for the most 
part, defunct political organizations or purely 
local concerns so far as the remnants of the 
earlier movements are concerned. 

Having passed through his period of clamor and 
appeals for help without avail, the farmer is turn- 
ing to the last and sensible course of action. He 
is getting together. He is rolling up his sleeves 
and helping himself. He realizes that no one is 
going to save him if he does not save himself, and 
** saved" he most certainlj^ proposes to be. 



6 The Modern Farm Cooperative Movement 

This is not new. There is a striking parallel in 
the case of labor. So long as labor was a great 
irresponsible mass, the politicians and dema- 
gogues periodically incited them ^ ' to rise and mu- 
tiny'' for the benefit of the party. But since the 
laboring man has learned the wisdom of sticking 
together, the politicians have been extremely 
chary of all matters pertaining to that class. 

Whether we agree with labor or not, the fact 
remains everyone must admit that the laboring 
class has perfected a powerful organization. The 
frequent threat of a strike is sufficient to recall 
that. But most of the chills that play up and down 
the spinal columns over the land when that occurs, 
come from the thought that all unions, transpor- 
tation, mining, industrial, might join hands. What 
then? ■ r "1^ 

The farmer in perfecting his various national 
organizations has attempted to follow this par- 
allel. He attempts to build just as the great labor 
organizations were built. The laboring man 
started with his local union, then he organized 
these all into a single union in the particular 
branch of industry. These, in turn, were merged 
into state and national federations. 

Likewise, the farmer is building on the local or- 
ganization. The largest of the farmers' organiza- 
tions at the present time — the Farm Bureau — 



Mr. Farmer Gets Together 7 

reputed to number over a million and a half paid 
members, is based upon a local or county organiza- 
tion known as the county farm bureau. These are, 
in turn, merged into state and national federa- 
tions. 

We are not, however, to concern ourselves with 
the farm organization movement, except in a cas- 
ual way. The real romance, and the real out- 
standing achievement in the great agrarian move- 
ment that is now commanding national attention, 
has come about through a different route. It has 
come through the attack and the partial solution 
of many of the economic problems confronting the 
farmer. It has come, in short, through the adop- 
tion of cooperation in various commodity or food 
groups, for the express purpose of affording 
prompt relief and relief in the direction whence it 
is most needed. 

It may surprise many people to learn that the 
American farmer has entered big business. The 
word ^^big" really ought to be capitalized, for it 
is B-I-G. 

The cooperation of farmers and food producers 
in business organizations is not, of course, of re- 
cent origin. It is nothing new. It has been going 
on with more or less earnestness of purpose for 
the past seventy years in various parts of the 
country. But it is onb^ since the World War that 



8 The Modern Farm Cooperative Movement 

it has really attracted serious attention from the 
country as a whole. All the while, though, like 
yeast in the dough, it has been working slowly, 
surely upward until at last it has burst the eco- 
nomic shell that hemmed it in. The cracks have 
already appeared and they are constantly widen- 
ing, as the days go by. 

The rapidity with which the farmers are organ- 
izing may be judged from the case of Minnesota. 
In 1919, there were 1,800 farmers' cooperative en- 
terprises in the state; in June, 1921, there were 
more than 3,000 of these local cooperative asso- 
ciations, to say nothing of the state federations. 
During the period from 1919 to 1921, the really 
important work and attention of the leaders of the 
movement was directed toward federation in com- 
modity groups, as we shall see in a subsequent 
chapter. 

In Iowa, there were 57 local live stock shipping 
associations in 1916, but on January 1, 1921, the 
number had grown to 610. The percentage of 
growth was probably even higher during 1921, 
and, in addition, a state federation was organized 
and successfully established, by no means a small 
task. 

We might go into more specific detail here as 
to the remarkable evidences to be had on every 
hand that the American farmer ^4s rolling up his 



Mr. Farmer Gets Together 9 

sleeves," and getting ready to take a hand in big 
business. That is the province of subsequent 
chapters. But these examples, chosen at random, 
can serve to give a background to the magnitude 
of the business operations of the man who feeds 
the world. 

Other developments, revolutionary develop- 
ments, have been brought to pass. We have the 
spectacle nowadays of seeing Mr. Farmer take his 
produce to town, sell it to his own local shipping 
agency, which, in turn, ships it to his own terminal 
marketing agency at the terminal markets. This 
marketing agency may sell it, in turn, to his own 
mills or factories, which manufacture the raw ma- 
terial into the finished product. These, in their 
turn, may sell the manufactured products direct to 
the consumer, or back to the farmer through his 
own cooperative buying agencies or stores. 

At the present writing, the greatest concern 
manifested by the farmer through his cooperative 
organizations, is the establishment of complete 
terminal marketing facilities. Likewise, he is or- 
ganizing in centralized community groups and 
state federations for the manufacture and sale of 
his products under standardized brands and 
through national advertising. 

The wonderful terminal elevators of the Equity 
Cooperative Exchange at St. Paul, the various 



10 The Modern Farm Cooperative Movement 

packing houses, flour mills, dairy products ' plants, 
the live stock commission houses of the Equity at 
St. Paul and Chicago, and of the Farmers' Union 
at Omaha and elsewhere, and the live stock com- 
missions established at many terminals by the 
Committee of Fifteen, are but fore-runners of 
the new day that has dawned for American agri- 
culture. In the line of special products, the Wis- 
consin Cheese Federation with its numerous 
plants and branches, and the California citrus 
growers ' organizations, the Michigan grape grow- 
ers ' federation and the like, are other pertinent 
examples. 

Many people minimize the farm cooperative 
movement. They fall into the error of assuming 
that it is something to be pitied, if not feared. 
' ' Oh, ' ' they exclaim, ' ^ cheese factories and cream- 
eries !*' And then sniff. 

There is nothing to sniff about in the farm co- 
operative movement. The annual business done 
by some of these **puny" little farmers' coopera- 
tives is almost staggering. The reader may well 
be surprised, as the writer was, to learn on a trip 
of investigation in Minnesota in the fall of 1919 
that the average annual business transacted by 
farmers' live stock shipping associations in that 
state was nearly $500,000 ! This meant, at the time, 
that the farmers of Minnesota were doing practic- 



Mr. Farmer Gets Together 11 

ally $300,000,000 annually in live stock in tliat one 
state! The annual business transacted by the 
Wisconsin Cheese Federation, the citrus growers 
of California, the grape growers in various parts 
of the country and the creameries, are equally 
staggering to the lay mind. 

One little creamery at Glencoe, Minnesota, an 
average small country town, did a business of 
$456,640 in 1919. It employs just seven people 
and is Glencoe 's largest industry. In addition, it 
handled $85,000 worth of fresh eggs. Any indus- 
try in a small town of 1,700 population which does 
a weekly business of close to $9,000 is not ordi- 
narily considered ^^puny. '' In fact, there are thou- 
sands of towns in the country three times the size 
of Glencoe not having cooperative concerns that 
cannot show an industry as prosperous. 

The American farmer has taken a leaf from the 
experience of big business. He has come to the 
point where he is determined that his own exploi- 
tations must cease. He is not entering the business 
world for the purpose of exploitation on his own 
score. He is not of that temperament; he is 
entering the business world for the express pur- 
pose of saving himself from the economic ruin 
that has so nearly engulfed him. He is fighting 
with his back to the wall for American agricul- 
ture; he sees its breakdown in the very near 



12 The Modern Farm Cooperative Movement 

future, if some of the present evils of our mar- 
keting system are not remedied. His house must 
be put in order if foreign competition is to be met, 
when the surplus-producing nations of the world 
come back into the world's markets. 

The present progress merely charts the lengths 
to which he may eventually go. But as to whether 
he can ever get together or not and succeed in 
business — ^big business — is no longer a subject of 
debate. He has succeeded and is succeeding be- 
yond his wildest dreams. 



CHAPTER TWO 

Farm Cooperation Today- 
It is extremely doubtful whether the average 
citizen appreciates the extent to which farm co- 
operation has been developed at the present time. 
Too often the suggestion that some such move- 
ment is on, leads one to assume that it is taking 
the character of local elevators or creameries, the 
influence of which is extremely limited. A super- 
ficial knowledge of the older movement often leads 
one to minimize the present one and scout the 
possibilities of success. 

The sober fact remains that the present move- 
ment gives every indication of healthy and sturdy 
growth. Cooperatives are bound to fail; many 
have been started in localities where the enthu- 
siasm and the cooperative spirit of the coopera- 
tors has entirely led them astray. Their possi- 
bilities of sufficient volume to make the venture a 
success, are too meagre to grant success. Others 
have unwisely chosen incompetent and poorly 
trained managers ; still others lack adequate credit 
facilities to insure financial success. But this is 
no brief against the soundness or lustiness of the 
whole movement. Private individuals are failing 



14 The Modern Farm Cooperative Movement 

in business every day; yet none arises to charge 
that business, itself, is to blame. 

The cooperative movement today gives every 
indication of success because it is being consoli- 
dated and federated into logical food or commod- 
ity groups; competent managers are being se- 
lected and trained in almost every state where the 
movement has attained any importance ; the fun- 
damental requirement of success — the proper 
spirit on the part of the membership — is more pro- 
nounced today than ever before. 

This growth has not come by chance. The 
farmer is not so rich or so idle that he is merely 
meddling ''in other people's business" as a past- 
time, or for the purpose of taking a flyer in big 
business. It has come through the most painstak- 
ing and heart-breaking work that ever confronted 
man in the economic world. It has taken long 
years of preparation through educational work; 
it has taken all of the resourcefulness of Eobert 
the Bruce to build anew out of the ashes of each 
defeat ; it has taken men with hearts of steel and 
personal will such as is seldom seen, save in the 
spirit of the crusader. 

J. M. Anderson, president of the Equity Co- 
operative Exchange of St. Paul, in a recent speech 
recounted some of the difficulties in cooperative 
pioneering. Mr. Anderson has been one of the 



Farm Cooperation Today 15 

''crusaders" in cooperative marketing since the 
days of the old ''dollar wheat" effort on the part 
of North Dakota farmers ten years ago. 

**The Equity Cooperative Exchange obtained 
12,000 farmer members in North Dakota on that 
slogan alone," said Mr. Anderson. "After we 
organized the exchange, however, we found that 
the 3,000 farmers' local elevators in Minnesota 
would not back us up, so we had to devote our 
energies and capital in the building of elevators 
of our own. 

"For four years we waged a losing fight, a fight 
that might have taken the heart out of any of us. 
Time and again I was advised to go and see this 
or that man, when things seemed the darkest. I 
would go to see them and be quietly advised to 
'lay off.' To the everlasting credit of the move- 
ment, we never once surrendered our faith in the 
idea ; never once have we sacrificed our principles 
one iota to the organized interests. 

"It isn't any wonder that we lost $100,000 in 
those four years. The wonder is that we sur- 
vived. We have demonstrated, by the success of 
the Equity Cooperative Exchange, that it is pos- 
sible to do a grain business without membership 
on the grain exchanges."* 



* Speech at Fairfield, Iowa, October 28, 1921. 



16 The Modern Farm Cooperative Movement 

Farm cooperation is forging ahead for the rea- 
son that the conclusion has slowly but surely been 
forced upon the American farmer that there is 
no future in store for him so long as he is at the 
mercy of other interests. It should be kept in 
mind that the farmer is the only business man 
who works entirely in the dark. He produces 
without markets ; he does not know when he plants 
his crops what price they will bring or whether 
they will bring anything at all. He has nothing to 
say about the value of his products when he brings 
them to market, nothing to do with price-fixing. 
He plants his crops, determines the acreage, hires 
his labor, incurs debts in harvesting — all in the 
dark. 

On the other hand, when he comes into the mar- 
ket as a purchaser of supplies, he must pay the 
price which others have set. It is not a favorable 
price such as others have secured on his products, 
without reference to the cost of production. The 
advantages which other business men secure 
through their organization, he is unable to secure. 
He must ever gamble on winning back his ex- 
penses, let alone a profit. 

A bulletin, ^'The Eoad To Better Marketing/' 
issued by the Wisconsin College Extension Serv- 
ice, explains the situation in a nutshell: 



Farm Cooperation Today 17 

^'Because farmers are unorganized and there- 
fore unable to prevent seasonal flooding of the 
markets upon which their goods are sold there are 
violent seasonal price fluctuations. So long as 
the motive of the competitive private middleman 
is to buy raw materials at the lowest possible price 
— and this means getting them from farmers who 
must sell during periods of seasonal surplus — 
there is bound to be a widespread unrest concern- 
ing marketing and much feeling about it. No one 
can hope to solve the problem of price fluctuation 
without first preventing the seasonal flooding of 

markets. '^t 

The thinking farmers, therefore, have sought a 
tool which could be used to equalize these unequal 
characteristics of our present marketing system. 
They have sought a tool that would (1) secure 
those advantages which the present system denied 
them, and (2) eliminate the waste of marketing 
and make it attractive to the consumer. The 
farmer felt that if he would correct the unequal 
tendencies of the present system which penalized 
not only the producer, but the consumer as well, 
that he would be in the happy position of ^^ killing 
two birds with one stone." He would win eco- 
nomic salvation for himself and the sympathy of 
the consumer at the same stroke. 



t Cir. 136, Wis. Ext. Ser., Theo. Macklin. 
2 



18 The Modern Farm Cooperative Movement 

It is obvious that no one farmer could come into 
the market with sufficient products or financial re- 
sources to accomplish this purpose. The market- 
ing of farm products could not be centralized or 
standardized, as the marketing of other raw ma- 
terials in the hands of corporations for profit has 
been because the farmer is not temperamentally 
suited to such an arrangement. He has slight 
sympathy with such propositions; he hates cor- 
porations and fears trusts with all his soul. He 
is not out with a club in hand for the purpose of 
exploiting any group, as he has been himself ex- 
ploited. All he seeks is the right of self -protec- 
tion. 

It was necessary, then, to act collectively — in 
short, to '^go in together,'^ to cooperate. While 
he might not be able to persuade every single 
farmer and food producer in the country to join 
the movement or to '^ stand hitched,'' if he could 
secure enough in any particular farm product to 
exert an influence on the market, he would secure 
the ends in mind. 

It is not necessary for the farmer to control the 
majority of the crop in any one product in order to 
stop the flooding of markets and thereby prevent 
violent price fluctuations. In a subsequent chapter 
dealing more specifically with prices and causes of 
unrest, we will show that a fluctuation of one and 



Farm Cooperation Today 19 

one-fourth bushels per capita in the annual pro- 
duction of potatoes, is what is responsible for the 
wide fluctuation in price in different years. If the 
farmer can control 25 per cent of the annual po- 
tato crop, he can largely control the potato market 
fluctuations with the constant threat of his reserve 
supply. 

Some such example might be applied to almost 
every commodity. The farmer seeks, first of all, 
a stable market. With a dependable market, 
maintained at a steady price level season in and 
season out, or at least one minus violent fluctua- 
tions, he can proceed to the production of his crops 
with something like intelligence. He can figure 
on costs of production with some degree of safety. 
He can determine acreages for each product upon 
definite market information. He can produce to 
a purpose. He can become a food manufacturer 
and not a gambler on what the market will buy at 
a profit. Farming can be brought out of chaos 
and established on an orderly, sane basis. And 
with the attraction of profit, country life will re- 
turn to its old state. 

The organizations which the farmers have per- 
fected with the accomplishment of this purpose in 
mind, may be divided into two classes, noncooper- 
ative capital stock companies and pure coopera- 
tive organizations. By the first term, we refer 



20 The Modern Farm Cooperative Movement 

to capital stock companies which are not coopera- 
tive in principle, but which have been formed by 
stockholders, usually farmers, and organized and 
conducted as private corporations for a profit. 
Such profits are distributed by means of dividends 
on the capital stock. There is no limit on the 
stock which may be held by any one member and, 
as in the case of private corporations, each mem- 
ber has as many votes as he owns shares of stock. 
These are not true cooperative principles, for each 
member in the cooperative organization should 
have an equal voice in the affairs of the organiza- 
tion, without reference io the share held in the 
concern. 

In the true cooperative organization, the mem- 
ber is limited as to the financial interest which he 
may have in the concern, he has the same voting 
power any other member has, and the earnings 
are distributed, (1) in the form of a fixed interest 
return on the capital invested, and (2) all addi- 
tional earnings are usually distributed in the form 
of patronage dividends to all patrons of the or- 
ganization, based upon the amount of business 
contributed to the organization during the year. 
Thus, the real earnings go to those who really 
produce them. 

This does not necessarily mean that true cooper- 
ative concerns may not be organized on the capital 



Farm Cooperation Today 21 

stock plan. This can be done if the stock to each 
member is limited, the voting power is made equal, 
and the dividend limited to a fair rate of interest. 
For the most part, however, the capital stock co- 
operatives were organized before the ^^ coopera- 
tive'^ laws were enacted in the various states. 
There was no other w^ay to secure recognition 
as a legal entity unless organization was per- 
fected under the existing corporation laws. Ee- 
cent legislation in many states has conferred this 
legal recognition on cooperative associations in 
which they have the full legal rights of old cor- 
porations. This, too, has been won only as the 
result of long agitation and a bitter fight. 

The nonstock form of organization is at all 
times preferable, from a legal standpoint, for co- 
operative organizations, and is the form most 
commonly adopted by them. This is largely for 
the purpose of avoiding conflict with the Federal 
anti-trust laws, which specifically exempt such as- 
sociations from consideration. 

Section 6 of the Clayton amendment to the anti- 
trust laws, passed by the Sixty-third Congress, 
reads : 

"That the labor of a human being is not a commodity or 
article of commerce. Nothing contained in the anti-trust laws 
shall be construed to forbid the existence and operation of 
labor, agricultural, or horticultural organizations, instituted 



22 The Modern Farm Cooperative Movement 

for the purpose of mutual help, and not having capital stock 
or conducted for profit, or to forbid or restrain individual 
members of such organizations from lawfully carrying out the 
legitimate objects thereof; nor shall such organizations, or the 
members thereof, be held or construed to be illegal combina- 
tions or conspiracies in restraint of trade, under the anti-trust 
laws." 

There are no reliable statistics at hand at the 
present time in regard to the number of farmers ' 
cooperative business associations in the United 
States. The number, however, is large, very large. 
As long ago (in the cooperative movement) as 
1917, the Office of Markets and Rural Organiza- 
tion of the U. S. Department of Agriculture se- 
cured the names and addresses of approximately 
12,500 farmers' purchasing and marketing organ- 
izations. These were secured from indirect 
sources and no pretense was made that the list 
was complete. 

In the intervening years we have witnessed the 
greatest growth of the cooperative movement that 
has come since its inception. It seems safe to say, 
then, that the number of such organizations in the 
country at the present time is close to 25,000 if it 
does not, in fact, exceed that figure. In this re- 
spect, we refer to all kinds of business coopera- 
tives, whether for purchasing, marketing, insur- 
ance, self-help, or whatever purpose. In some 
sections, each day has been bringing an average 



Farm Cooperation Today 



23 




24 The Modern Farm Cooperative Movement 



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NUMBER OF ORGANIZATIONS BY CLASS IN FIFTEEN LEADING 
COOPERATIVE STATES (1917). 

— BuL 547, U. S. Dept. Agri., 1917. 

of two or three new cooperatives to life for some- 
time. Hence, we do not feel that we have over- 
stated the case by estimating that there are two 
times the cooperatives in the country that there 
were in 1917. 

Of the list of 12,500 cooperatives reported to 
the Department of Agriculture, a survey was 
made of 5,424 organizations w^hich answered the 
Department's questionnaire. The distribution of 
these cooperatives, as shown on the accompanying 
map, indicate that the great center of the move- 
ment at that time was to be found in the States of 
Minnesota, Iowa and Wisconsin, with a liberal 



Farm Cooperation Today 25 

proportion in North Dakota, South Dakota, Ne- 
braska and Kansas. A number are shown also on 
the Pacific Coast and scattered throughout the 
South. For the most part, though, the great ma- 
jority are found in Minnesota. 

A similar map showing the cooperatives in ex- 
istence today would greatly resemble the one 
shown for 1917, because the growth has been in 
these same states. Minnesota had 1,800 coopera- 
tives in 1919, and in June, 1921, the number had 
grown to 3,000. The growth in other states has 
probably been proportionately the same. The 
only difference such a map would show, as of the 
present, would be the increase in other sections 
which the movement had not touched in 1917. 

The distribution of the cooperatives in 1917, by 
states, is also shown in an accompanying chart. 
It divides the number into the various kinds of 
business transacted, of the 5,424 cooperatives re- 
porting to the Department. The chart gives a 
graphic idea of the extent to which Minnesota and 
Iowa are the principal cooperative states. While 
the fact remains at the present time that Minne- 
sota leads in the number of cooperatives, it is 
doubtless true that Iowa is considerably closer to 
her in the number of cooperatives now in opera- 
tion. 



26 The Modern Farm Cooperative Movement 

A most remarkable growth has likewise been 
made in the South and West. While the move- 
ment had its first great development in what is 
known as the Corn Belt, the most recent great de- 
velopment has been in the Grain Belt and the Cot- 
ton Belt. Arkansas and the western grain states 
have shown great interest in the cooperative 
idea. Only recently, press dispatches carried 
notice to the effect that the Arkansas rice grow- 
ers had organized a cooperative marketing and 
milling concern which controlled 700,000 bar- 
rels of rice at its inception. The organization 
showed such promise that the government, 
through the War Finance Corporation, had ad- 
vanced it $1,000,000 to finance its operations. 

The farmers' cooperative movement today is to 
be found in some form in practically every section 
of the country. It has climbed out of the purely 
local class with leaps and bounds the past few 
years. And yet the work of local development is 
still going on. It means, in short, that the farmer 
has found the tool with which to combat the eco- 
nomic conditions which have threatened to ruin 
him; it means that he is now setting up the ma- 
chinery necessary to win this economic freedom. 
And he is building in all directions and building 
as strong as he knows how. 



CHAPTER THREE 

History of the Movement 

One who has studied the cooperative movement 
carefully cannot fail to be struck with the thought 
that certain conditions almost invariably produce 
similar results. Given a period of depression in 
the price of farm products, and it has invariably 
followed since the Civil War that great life and 
stimulation is given to the farm cooperative move- 
ment. 

The cooperative movement today is not new. 
It is but the scion of other days when similar con- 
ditions threatened the embattled farmers of the 
land. The thought has been beautifully expressed 
by Elbert Hubbard, in the following words: 
^^ Ideas are born; they have their infancy, their 
youth — their time of stress and struggle — they 
succeed, they grow senile, they nod, they sleep, 
they die ; they are buried and they remain in their 
graves for ages. And then they come again in 
the garb of youth, to slaughter and slay — and in- 
spire and liberate. And this death and resurrec- 
tion goes on forever. In TimiC, there is nothing 
either new or old ; there is only the rising and the 
falling of the Infinite Tide. ' ' 



28 The Modern Farm Cooperative Movement 

The cooperative movement first appeared in 
any considerable proportions in the United States 
following the Civil War. Oliver H. Kelley, a 
clerk in the office of the Commissioner of Agricul- 
ture at Washington, fathered the first farm move- 
ment. It was called the National Grange of the 
Patrons of Husbandry, and was a ritualistic order 
patterned after the Masonic Order. It proposed 
to relieve the distressing condition of the farmer 
through education and mutual self-help. 

The story of the early struggles of Kelley in the 
organization of the Granges is one of bitter dis- 
couragements, defeats and rebuffs. But Kelley 
hung on for the space of several months. It is 
significant to note that he worked westward rapid- 
ly after organizing the first Grange in Washing- 
ton, until he found himself in Minnesota, where he 
owned a farm. There his plea fell on fertile 
ground and he commenced to make some headway. 
The people from the north of Europe, who had 
settled in this region, were acquainted with 
the cooperative idea, especially those who had 
come from Denmark, where it had been in practice 
with more or less success for twenty years. 

But the Minnesotans did not take to the idea 
until the first purely local Grange had been or- 
ganized at Newton, Iowa, in May, 1868. Later in 
the fall of the same year the first Minnesota 



History of the Movement 29 

Grange was organized in St. Paul. Gradually the 
movement made headway until economic condi- 
tions resulting from the inflation following the 
Civil War brought matters to a head and focused 
the attention of the farmer upon his own state of 
affairs. 

One cause can be read in the relative change in 
the center of national wealth which had occurred 
during the war and the period immediately fol- 
lowing it. In 1850 the total rural wealth was 
placed at $1,000,000,000 more than the total urban 
wealth; by 1870 the rural wealth had increased 
two and one-half times what it was in 1850, while 
the urban wealth had increased seven times its 
former amount. The years 1870-73 were years of 
inflation, of industrial expansion, prosperity and 
speculation. They were not unlike the years 1919- 
1920 following the World War. Such periods are 
always periods of adversity for the farmer. He 
is the last to receive the benefit of the *'boom'' 
prices and its attendant *^ prosperity" and the 
first to feel the pinch when the bubble bursts. In 
some cases, he never receives any of the benefit 
in proportion to other interests, as was true fol- 
lowing the Civil War.* 

By the end of 1873 the Grange had organized 
every state in the Union with the exception of four 



Farm Bureau Movement, The, O. M. Kile. 



30 The Modern Farm Cooperative Movement 

and had a membership in excess of 20,000 local 
Granges. In 1874, it had a membership of more 
than half a million farmers and was rapidly be- 
coming a serious factor in the economic and poli- 
tical life of the nation. It began to attract wide- 
spread attention and to lock horns with the vari- 
ous interests which the farmer felt were standing 
between him and economic justice. It is impos- 
sible to recount here the details of the Granger 
movement, interesting as they were. It is suffi- 
cient to say that while the movement ultimately 
lost its position of power and influence, largely be- 
cause it went whirling off into space on a political 
tangent, it did achieve some lasting reforms of 
benefit to the entire nation. 

It secured the first legislative regulation of rail- 
road freight and passenger rates in the country, 
and the establishment of the first state railroad 
commissions, thus laying the way for the present 
Interstate Commerce Commission. Some of its 
struggles were extremely heated and bitter, but 
until the Grange surrendered its principle of stay- 
ing out of politics, it won every struggle which it 
waged. 

Of course, the factions of disintegration early 
appeared. The proverbial ^'monkey wrench" 
soon put in its appearance in many disguises. 
Dissatisfaction arose for anv one of a number of 



History of the Movement 31 

reasons, based upon the human equation and the 
Grange was prepared for burial by its own pro- 
fessed friends. 

While the Granger movement graviated from 
one political movement to another until it was 
finally lost in the defeat of Bryan in 1896, the 
larger movement, so far as we are concerned in 
the present discussion, did not entirely pass out. 
We refer to the cooperative business agencies or- 
ganized more or less loosely along the line of the 
Rochdale cooperatives of England. 

In the local Granges, the farmer first learned, in 
a social way, the value of cooperation, of banding 
together to accomplish for the class w^hat he could 
not accomplish as an individual. If cooperation 
and union was good in political matters, why 
wouldn't it be equally effective in economic mat- 
ters? Grange stores were organized here and 
there; buying was more and more done on a co- 
operative or pooled plan, particularly in the case 
of farm machinery and supplies. 

Local elevators, creameries and other coopera- 
tive business organizations began to appear. But 
the great effort was made in the direction of the 
manufacturing of farm implements and machin- 
ery. The Iowa Grange purchased a patent and 
commenced to manufacture farm implements. 
They were able to sell for a price far below that 



32 The Modern Farm Cooperative Movement 

asked by other manufacturers and a rosy future 
seemed in sight. The National Grange then de- 
cided to enter the field and establish factories all 
over the country. But within another year the 
Iowa venture failed, and it served to ' ^ let the gas 
out of the bag'^ and the movement settled to 
earth. A movement which had attained a member- 
ship in large numbers of 900,000 in 1875, found 
itself with less than 125,000 by 1877. 

Dissatisfaction with the Grange and the better- 
ment of farm prices somewhat were responsible 
in large degree for the slump in interest in the 
Grange. 

The next great farmers ^ movement appeared in 
1885 as the Farmers ' Alliance. It came up largely 
from the South, particularly Texas where it had 
its inception. It devoted possibly more attention 
at the outset to cooperative ventures than did the 
Grange, but it also came before the country with 
a frank political purpose, to be effected along more 
or less nonpartisan lines, that almost effected a 
political revolution in the Middle West. Its great- 
est effort came in the elections of 1890 where, par- 
ticularly in Kansas and the Dakotas, it succeeded 
in overturning the opposition and sending its ad- 
herents to Congress. This contest, which was 
known as the *^ Populist" movement resulted in 
forty congressmen taking their seats in the House 



History of the Movement 33 

of Eepresentatives, under the leadership of 
''Sockless'' Jerry Simpson. 

The effect of the Alliance movement was not en- 
tirely lost. It served notice on the old parties 
that trifling with the farmer voter could no longer 
be as flagrantly pursued as in the past. He had 
demonstrated, and in a fashion not to be misun- 
derstood, that he could overturn when his temper 
was aroused, the entire political machinery and 
resources of both old parties. The leaders of the 
old parties commenced to pay some attention to 
the pleas of the farmers ^' after the votes were 
cast,'' and to adopt some of the measures for 
which the farmers were contending. But the real 
power of the Alliance disappeared in the interval 
between 1890 and 1892. 

Although the Grange and the Alliance survived 
in remnants here and there, it was not until ten 
or twelve years later that another national move- 
ment reared its head above the status of purely 
local organization. We refer to the Farmers' 
Educational and Cooperative Union of America, 
better known as the ^'Farmers' Union." Again, 
the movement originated in Texas, as did the 
Farmers' Alliance. Newt Gresham of Emory, 
Texas, is credited with the organization of the 
first Farmers' Union in 1902. It spread rapidly 



34 The Modern Farm Cooperative Movement 

throughout the South, building largely out of the 
ruins of the old Alliance. 

The Farmers' Union marked a new step in the 
long history of the farmers' cooperative move- 
ment, for it was the first organization to come 
into the field for the avowed and distinct purpose 
of confining itself to a consideration of the eco- 
nomic problems confronting the farmer. In fact, 
it went farther and in its Constitution, set forth 
these worthy purposes, among others : 

"To assist our members in buying and selling. 

"To teach farmers the classification of crops, domestic econ- 
omy, and marketing methods. 

"To systematize methods of production and distribution. 

"To eliminate gambling in farm products by Boards of 
Trade, cotton exchanges and other speculators. 

"To secure and maintain profitable and uniform prices for 
cotton, grain, live stock, and other products of the farm." 

To this end cooperative stores were established, 
local live stock shipping associations, terminal live 
stock commission houses, local elevators, ware- 
houses, exchanges dealing in a wholesale way with 
farm supplies of all kinds, and a system of ware- 
houses was established in each of the cotton-grow- 
ing states in the South.f 

Dissatisfaction with cotton prices and methods 
of marketing may be said to be the origin of the 



t Barrett, Chas. S., ''Mission, History and Times of the 
Farmers' Union." ' 



History of the Movement 35 

Farmers' Union movement. The leaders soon 
came to the conclusion, however, that farmers in 
other sections of the country were suffering simi- 
lar abuses and that their problems were largely 
the same, and admitted of the same solution. So 
they took in the grain grower, the live stock pro- 
ducer and the general farmer. They made head- 
way because they constantly emphasized the busi- 
ness side of the cooperative principle. They 
rigorously avoided politics, and have succeeded in 
avoiding this pitfall to a very successful degree. 

Some of the most successful of the accomplish- 
ments of the Farmers' Union are to be found in 
Kansas and Nebraska. In Nebraska, the Farm- 
ers' Union transacted a total business of $100,- 
000,000 in 1920. The Nebraska work was for 
years under the able and efficient direction of Mr. 
C. H. Gustafson, then state president, and now 
president of the U. S. Grain Growers, Inc., the 
farmer-owned and controlled grain marketing 
agency launched by the Committee of Seventeen 
in 1920. 

It is hard to estimate the actual membership of 
the Farmers ' Union at the present time because of 
the conflicting reports which have been issued. 
There can be no doubt but that it reached a high 
peak of influence around 1910-12, then suffered a 
slump in its ranks for several years. The coming 



36 The Modern Farm Cooperative Movement 

of the Farm Bureau gave it a temporary set-back 
in membership, but within the past few months 
(1921) the Farmers' Union has shown a new lease 
of life. Dissatisfaction with the Farm Bureau in 
some quarters, the disposition of other farmers' 
organizations to join with the Union rather than 
the Bureau, and the tightening of the lines in 
order to hold its own against the more popular 
rival, have given it a healthy condition again. 

One of the most important of the more local or- 
ganizations which has stressed almost entirely the 
business side of cooperation has been the Ancient 
Order of Gleaners. It is a ritualistic society 
founded more or less closely along the lines of the 
old Grange. Grant Slocum of Michigan, a pub- 
lisher of farm papers, was the founder. The or- 
ganization started in 1894 and has had a slow, 
steady growth, practically all of which has been 
in the state of Michigan. The Gleaners own many 
business institutions in Michigan and have a 
splendid office building in Detroit. They have 
paid particular attention to the marketing of farm 
products and the purchasing of supplies, in a 
cooperative way. 

The Equity movement dates back to about 1900. 
There have been so many splits in the ranks, and 
so many movements under the designation of the 



History of the Movement 37 

^'Equity" that it is difficult to trace its history 
with clearness. The American Society of Equity 
was the parent body. It grew in Illinois, Wiscon- 
sin and Indiana about 1900 and at various times 
attained some prominence, especially in Wiscon- 
sin. At the present time, however, it is prac- 
tically dead, having paid-up members in only one 
state, and that membership is bargaining to join 
the Farmers ' Union. 

An important off-shoot of the American Society 
of Equity, however, has made one of the most dis- 
tinct successes yet won by farmers' cooperative 
organizations. We refer to the Equity Coopera- 
tive Exchange of St. Paul and Chicago. This or- 
ganization broke away from the parent body some 
years ago and has attained a large membership 
in Minnesota, North Dakota, Montana and north- 
ern Iowa. The Equity Cooperative Exchange is 
purely a business organization, and is treated 
more in detail in Chapter XIII. 

The Farm Bureau originated in Broome county, 
New York, in 1911. It is unique in the annals of 
farm organization history for the reason that it 
has had the benefit of state and Federal financing, 
through the county agent system with which it is 
identified, which promises to do much to keep the 
interest of the local or county bureaus alive and 
thereby prevent the early disintegration of the 



38 The Modern Farm Cooperative Movement 

movement. In 1921, the Farm Bureau had a paid- 
up membership of 1,500,000 members in all parts 
of the country. These farmers are paying annual 
dues ranging from $5 to $15 each for the privilege 
of membership. 

The Farm Bureau, as an independent organiza- 
tion, can have only passing interest to us in a dis- 
cussion of farmers' cooperative business associa- 
tions for the reason that it does not actively and 
as an organization come into the field with cooper- 
ative business organizations. We do not have 
^^Farm Bureau'' cooperative exchanges or busi- 
ness organizations. 

It does interest itself, however, in the better 
marketing of farm products and to the true 
principles of cooperative effort. These efforts 
are for the most part independent of, and 
entirely aside from, the Farm Bureau. We find 
the Farm Bureau encouraging local shipping as- 
sociations, and national cooperative terminal mar- 
keting agencies (witness the U. S. Grain Growers, 
Inc., and the Committee of 15 Livestock Marketing 
Plan) where such effort seems necessary. But, as 
a whole, the Farm Bureau organization is not ty- 
ing up to a kite which has caused other similar or- 
ganizations grief in the past. 

No one can disparage the Farm Bureau for this 
attitude. It is a question of policy which it has 



History of the Movement 39 

decided contrary to the decision of farmer organ- 
izations in the past. It is doubtless wise; the 
failure of a cooperative movement now cannot 
well take down with it the Farm Bureau move- 
ment, if the Farm Bureau is not intimately tied 
up to it. At the same time, the Farm Bureau is 
not blocking the growth of farmers^ cooperative 
enterprises. Not by any means. Some of the 
best development in this direction has been under 
the influence of the Farm Bureau and its leaders, 
as w^e shall see in subsequent chapters. 



CHAPTER FOUR 

Causes of Unrest 

It is not hard to discover the causes of the un- 
rest among farmers, or at any period when the 
movement to organize has been pronounced. Any 
one with imagination can diagnose the workings 
of the farmer's mind; lacking imagination, he can 
look up a competent table of farm statistics and 
discover the reason. 

Conditions are slightly different than they have 
been during other periods of depression. While we 
have always been more or less of a surplus pro- 
ducing nation, we were never more so than at 
the present time. There was a time when the 
average farmer produced very little more than 
was necessary to support his own family ; he had 
little surplus to market, and most of it went to 
barter at the store for the necessities he could not 
produce. Today, practically every farmer is pro- 
ducing vast quantities of foodstuffs and raw ma- 
terials. The family living is coming to be more 
and more an incident to farm production; some- 
times it is neglected almost entirely, where the 
farmer is a specialist. 



Causes of Unrest 

Fig. 3. 



41 



INDEX NUMBERS OF WHCLESALE PRICES 

CIVIL WAR AND WORLD WAR 

CIVIL VMR 1856-1860-100 WORLD WAR AUGI9Q9-JULY 1914-100 


250 

200 
ISO 


: 










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: 


850 
200 
150 
■100 


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1B61 1662 1963 186* I66S 1866 1867 1866 1869 1870 1671 1872 1873 187*. 1875 1876 1877 
191^ I9IS 1916 1917 1918 1919 1920 1921 


1878 



Wholesale prices in the United States, by quarterly periods, showing the 

violent drop and partial recovery after the Civil War and the more violent 

drop after the World War. 

— Bui. 999, U. S. Dept. Agri., p. 4. 

Dr. W. J. Spillman, recently of the U. S. De- 
partment of Agriculture, said in an address before 
the 1921 ^^ Farmers' Week,'' at Columbia, Mo.: 

"Just a few more than one hundred years ago farming was 
hand work, and one man could till from five to ten acres of 
land. That part of the country which was settled before that 
time had little farms from fifteen to twenty-five acres. Thirty 
acres of cultivated land they thought a big farm, and it took 
a big family to till it. 

"Today, I know a man who plowed the land, put it in good 
condition, and planted four hundred acres of wheat himself, 
without help from any other living being except his horses. 
Every day when he went to the field he drove eight horses. 
He raised twelve thousand bushels of wheat in one year, with- 
out a single day's help from anybody except at harvest time, 
and in that country the harvest is all done by custom crews. 
He didn't take any part in the harvest himself, and he plowed 
the land, put it in good condition — which he had to do to raise 



42 The Modern Fann Cooperative Movement 

thirty bushels of wheat to the acre, which he did — and spwed 
the wheat. Four hundred acres of wheat! That is a record, 
so far as I know, with horse power. 

"In the year when we went into the World War and sent 
our boys all into the army, there was an old farmer in Indiana 
sixty-three years old, who had been retired for thirteen years. 
The Government called on him to produce all the wheat he 
could to feed our armies and our allies in the great war. He 
couldn't get any help but he had a lot of land and he had 
horses. One of my boys told me that one day he saw that old 
man driving an eight horse team hitched to a big disc harrow 
and leading a six horse team hitched to a big drag harrow. 
One old man, sixty-three years old, working fourteen horses! 
Now that was pretty good work for a young fellow! 

"The point I want to make is this, that now-a-days, for the 
major operations of the farms, the farmer uses more power 
than he has in his muscles. He uses the power of horses, he 
uses mechanical power, he uses the forces of nature, outside 
of himself; whereas, one hundred years ago he used main 
strength and awkwardness in his farming. What does that 
mean? 

"It means that where we used to grow five to ten acres of 
crops per man, today it is a fairly easy thing for a man who 
has a properly diversified system of crops, a good crop rota- 
tion, to handle a couple of hundred of acres of land. One 
hundred acres is easy. * * * 

"It means that one man working on a farm today can pro- 
duce ten times as much food as he produced a hundi'ed years 
ago, or than his grand-daddy produced a hundred years ago. 
Ten times as much production per individual." 

While production has been increasing on the 
farms it has, by no means, been lagging in the fac- 



Causes of Unrest 43 

tories, the mills and the mines. The labor re- 
leased by the farmer through his increased food 
production, which has gone to the cities and en- 
gaged in industrial production, has likewise had 
the benefit of mechanical power to increase its pro- 
duction. The man in the factory today may, b}^ 
the simple operation of touching a button or pull- 
ing a lever, produce one hundred times as much as 
the industrial worker working with his hands a 
hundred years ago could turn out. 

This means that the wealth of the country has 
been increasing at a tremendous rate; that it is 
many, many times what it was one hundred years 
ago. Dr. Spillman continued : 

"This development of producing power, the application of 
mechanical power, of electricity and steam power, has gone on 
so rapidly, has increased our wealth production so rapidly, that 
we haven't yet learned to consume all of it. 

" .... It happens that this application of mechanical power, 
this creation of wealth has gone forward at a more rapid rate 
in city industries than it has on the farm, and the accumula- 
tion of capital and surplus wealth which could be used for 
extending industry has nearly all been in city industries. 

"Even where the farmer has created surplus wealth, instead 
of applying it to the extension of his own business, for broad- 
ening and intensifying agriculture, he sells his surplus, puts his 
money in the bank, and the banker, in order to make it profit- 
able to him, sends that farmer's money to New York City to 
loan to a trolley company to build a new trolley line, to loan 
to a factory man to build a new factory. 



44 The Modern Farm Cooperative Movement 

"The surplus wealth created in the country has been used 

to build additional industries in the city This application 

of the surplus wealth to broadening and strengthening of city 
industries has created unprecedented demands for labor in 
those city industries, and the effectiveness of labor with all this 
power available to it has enabled those city industries, very 

legitimately, to pay enormous wages That is what is the 

matter with us mainly in agriculture today .... and then, in- 
stead of using that surplus wealth in developing all of our 
industries, including agriculture, in a co-ordinated manner, 
we have used too large a proportion of it for the development 
of city industries, and have drawn labor away from the farm 
to the point that now, when you old men have to quit, there 
isn't anybody to take your places." 

The simple fact that there has been an increased 
individual production by the farmer the past hun- 
dred years is not, of course, responsible for the 
unrest of the farmer, entirely. If it were, it would 
seem to be a simple matter to curtail that produc- 
tion to the point where the maximum pro'fit could 
be realized. There has been the more or less in- 
creasing competition of cheap food from the low- 
production-cost agricultural countries, notably 
Australia, Argentine, China and Denmark. The 
food importations of these countries to our shores 
has aided materially in holding down or forcing 
down the price of farm products on our markets. 

Increased individual production is not wholly at 
fault. There has been a need for it; so great a 
need, in fact, that for years the greatest cry to the 



Causes of Unrest 45 

farmer has been to produce more that food might 
be cheaper in price. While the American farmer 
has ever been a maximum producer, he has about 
come to the conclusion that he has been led astray 
by persons selfishly interested in seeing him piling 
up the grain and the live stock and other products. 
We may even witness the unique spectacle of the 
American farmer cutting down his grain acreage 
and planting clover or *' keeping his corn in the 
ground/' as the expression goes, because he is 
questioning the old theory of '^increased" pro- 
duction. He now spells the term ^'sane'' produc- 
tion, or production at a profit. 

The thought that he has been constantly urged 
to produce more, and has produced more, coupled 
with the experience that in the years when he has 
worked the hardest and spent the most money get- 
ting what the market pretended to want, he has 
found himself with ruinously low prices to face 
when he came to market, has had a great deal to 
do with the growing dissatisfaction of the farmer. 

And when you consider the marketing system 
now followed in this country, you have put your 
finger on the great big ^^sore spof The farmer 
is more than dissatisfied with existing marketing 
agencies and conditions. This feeling has not 
come to a head through over-night grievances or 
fancied slights. It has been growing upon the 



46 The Modern Farm Cooperative Movement 

farmer through sixty years of abuses and hard 
knocks. 

In war years he witnesses the great prosperity 
on every hand, the hordes of new millionaires cre- 
ated by the profligate spending of ''blood and 
treasure;'' he witnesses every industry dealing 
with the Government in the emergency receiving 
guaranty contracts of more than fair profits; he 
witnesses the profiteering of every class and is 
victimatized by many of them, and on the other 
hand, finds the prices of the products he manu- 
facturers controlled by the Government (as all 
prices should be) — and there arises in his breast 
that all-compelling question, Why? 

When the inevitable "deflation'' comes, he is the 
first to bear the brunt. The violent fluctuations 
of the market tend to catch him both ways — as 
the producer of food and raw materials, and as a 
consumer seeking the manufactured product. The 
United States Department of Agriculture has 
said, in Bulletin 999, page 4 : 

"Another characteristic of prices during a pe- 
riod of rapid change in the general price level is 
the violence of fluctuation. In normal times the 
prices of each individual farm product usually 
fluctuate about the general price level. In periods 
like the present (1921) there is more than the 
usual uncertainty as to supply and demand, and 



Causes of Unrest 47 

an even greater disturbing factor is the shifting of 
the general price level about which individual 
prices fluctuate. 

** During each of the periods of rapidly rising- 
prices, as from 1899 to 1912, the cost of living has 
been widely discussed, largely because wages have 
tended to lag behind prices and salaries and in- 
comes from investments have changed even more 
slowly. 

^^When prices fall more rapidly farmers and 
others who go in debt to produce articles to sell 
find the payment of debts to be increasingly diffi- 
cult. At each period of rapidly falling prices the 
money question has been greatly discussed." 

Elsewhere in the same Bulletin, the Department 
again states (page 17) : 

^ ' Farmers sell on a quickly moving market and 
buy on a slow market, hence, when a sudden and 
violent drop in prices occurs, they sell at low 
prices long before any great reduction occurs in 
the price of things that they buy. ' ' 

The dissatisfaction of the farmer with the mar- 
keting system has been smouldering for two gen- 
erations. A ray of hope has come now and then 
in great movements promising relief. But these 
have been too visionary, or have promised too 
much to enjoy the success they deserved. The 
farmer has not yet made up his mind as to the 



48 The Modern Farm Cooperative Movement 

remedy ; he knows the evil, he knows that it ought 
to be changed, but he finds himself in the position 
of combatting an entrenched foe without weapon, 
capital or experience. 

The farmer has come to distrust and to loathe 
the middleman. He charges him with being the 
party largely responsible for his troubles at the 
markets. All the farmer knows is that he is paid 
so much for his products and that when they get 
into the consumers hands they bring several times 
the farm price. He blames the middleman for 
that. 

The middleman, on the other hand, quietly takes 
advantage of the wholesale marketing of the 
farmer in the fall months immediately following 
the harvest, buys at the low point, and then feeds 
the market in an orderly manner throughout the 
year. In this way he is enabled to charge all the 
^ * traffic will bear ' ' and take increased profit from 
his speculation. 

It took the farmer a full forty years to learn this 
fact, to realize that disorderly marketing, market- 
ing in excess of what the market desired, was 
really one of the larger factors for the depression 
of farm product prices each autumn. And he has 
put that down in his mind as a thing to be rem- 
edied, and which can be remedied, by cooperative 



Causes of Unrest 



49 



Fig. 4. 

COMPARISON OF PRICES PAID TO FARMERS IN VARIOUS 
STATES AND WHOLESALE PRICES. 





5-year 
average 
before 
the war 
June, 
1910-1914. 


June, 
1921. 


Percent- 
age that 

1921 

price is 

of 5-year 

average. 


Corn: 

Farm price — 

United States 


Cents. 
67.7 
55.4 
75.4 
71.8 

90.8 
83.0 
87.6 
101.6 
104.8 

12.7 
12.4 
13.1 
13.51 

16.7 
15.6 
20.2 
24.25 

23.5 
25 
28 
26.48 

17.5 
18 

20.4 
21.55 

$7.16 
7.32 
7.42 
7.40 

145.00 
139.00 
165.00 
180.00 


Cents. 
62.5 
44 
93 
88 

127.4 

114 

130 

135 

182.5 

9.8 
9.9 
10.5 
12.90 

19.4 
16 
29 
26.25 

29.4 
26 
36 
29 

15.4 
16 
18 
30.5 

$7.22 
7.00 
7.40 
7.80 

98.00 
60.00 
125.00 
147.00 


Per cent. 
92 


Iowa 


79 


New York 


123 


Wholesale price, No. 2, mixed, New York City 

Wheat: 

Farm price — 

United States 


123 
140 


Washington 


137 
148 


New York . 


133 


Wholesale price, No. 2, red winter. New York City. . . 
Cotton: 

Farm price- 
United States 


174 

77 


Texas 


80 


Georgia 


80 


Wholesale price, middling upland, New York City.. . . 
Eggs:. 

Farm price- 
United States 


95 
116 


Iowa 


102 


New York 


144 


Wholesale price, average best fresh, New York City . . 
Butter: 

Farm price- 
United States 


108 
125 


Minnesota . 


104 


New York 


129 


Wholesale price, creamery extra, New York City 

Wool: 

United States 


110 
88 


Montana 


89 


New York. 


88 


Wholesale price, Ohio fine, unwashed, Boston 

Hogs: 

United States 


142 
101 


Iowa . . . 


96 




100 


New York 


105 


Horses: 

Farm price — 

United States 


68 


Montana 


43 


Iowa 


76 


New York 


82 



-Bui. 999, U. S. Dept. Agri., p. 18. 



50 The Modern Farm Cooperative Movement 

marketing. In addition, the obnoxious middleman 
can be eliminated at the same time. 

A glance at the accompanying charts (Figures 
3, 4, 5 and 6), will serve to indicate what takes 
place in the farmer ^s mind when he discovers the 
facts which these charts indicate. It will be no- 
ticed that since the outbreak of the World War 
that the tendency has been for the '^ spread ^^ be- 
tween the farm price and the retail price of com- 
modities to become greater and greater. The 
farmer wonders why this should be. He feels that 
an injustice has been practiced upon him when he 
has not been permitted to keep pace with the other 
trends. 

For instance, he notices that the June, 1921, 
price of corn in Iowa is but 79 per cent of the five- 
year average price prior to 1914, while the whole- 
sale price of corn in New York City is 123 per cent 
compared to the same five-year average. Kansas 
wheat in June, 1921, was 148 per cent above the 
average 1910-14 price, while the New York whole- 
sale price had risen to 174 per cent. (See Fig. 4.) 

The feeling that he was not getting a fair shake 
at the hands of the present marketing system has 
been created and aggravated by a number of in- 
stances and experiences. Dr. W. J. Spillman tells 
a common one, in the following words : 



Causes of Unrest 51 

^'When I was a boy down in Lawrence county, 
Missouri, we used to sell our wheat at the local 
elevator, and it was then shipped to St. Louis 
where it was milled. At that time we got six cents 
below the market price at St. Louis. Freight was 
cheap in those days. After a while, it came about 
that instead of shipping wheat from southeast 
Missouri to St. Louis to be milled, it would be 
shipped to Fort Worth and Dallas and Austin, 
Oklahoma City and El Paso. Yet the elevators in 
Pierce City were still paying, not six cents now, 
but ten cents below the St. Louis price of wheat, 
when wheat was being shipped right through St. 
Louis to the same place we were shipping our 
wheat. Under all the rules of war and trade we 
were entitled to the St. Louis price plus freight, 
because those elevator men who bought our wheat 
actually did get that. They were making twenty 
cents a bushel merely for pouring our wheat out of 
our wagons into their bins and running it through 
into a car. While we spent the better part of a 
year making that wheat, they spent ten minutes 
handling it and getting twenty cents a bushel 
profit out of it. 

^'We built a little cooperative elevator down 
there, holding about two carloads of wheat. The 
day we announced we were ready to receive wheat 
in that elevator, the price of wheat went up 



52 The Modern Farm Cooperative Movement 

Fig. 5. 
NOTE INCREASE IN "SPREAD" OP PRICES IN RECENT YEARS. 




Price of hogs and pork chops from January 1, 1912, to December, 1920. 
(A) — Farm price of hogs in Missouri. (Data from Monthly Price Re- 
ports.) 
(B) — Retail price of pork chops in St. Louis. (Data supplied by U. S. 
Bureau of Labor Statistics.) 

—Missouri Farm Review, 1920, p. 25. 

Fig. 6. 




Beef cattle and beef prices, January 1913, to December, 1920. 
(A) — Farm prices of beef cattle in Missouri. (Data from Monthly Price 

Reports.) 
(B) — Wholesale price of steers, good to choice, at Chicago. (Data sup- 
plied by U. S. Bureau of Labor Statistics.) 
(C) — Wholesale price of fresh beef from good native steers at Chicago. 

(Data supplied by U. S. Bureau of Labor Statistics.) 

(D) — Retail price of round steak in St. Louis. (Data supplied by U. S. 

Bureau of Labor Statistics.) 

— Missouri Farm Review, 1920, p. 23. 



Causes of Unrest 53 

eighteen cents a bushel in our adjoining towns 
without any change in the price at St. Louis at all. 
We got the legitimate market price of wheat, 
whereas before we weren't getting it. Wherever 
there is discrimination of that kind, this cooper- 
ative selling of wheat will wipe it out. ' ' 

Few people know that the dissatisfaction of the 
farmers of North Dakota which caused the Non- 
partisan League to come into being, was grounded 
in a bit of dishonesty practiced by the milling in- 
terests concerning the wheat crop of 1916. Sena- 
tor E. F. Ladd, formerly president of the North 
Dakota Agricultural College, explains it in the 
Congressional Eecord, May 2, 1921, as follows : 

**The best illustration of the essential dishon- 
esty of this system of marketing was shown in 
1916, when hot winds resulted in the production of 
shriveled kernels of wheat throughout North Da- 
kota. The grain buyers announced that this wheat 
was unfit for human consumption and that none of 
the existing grades would cover the case. There- 
fore they said that the North Dakota wheat that 
year would have to be used for chicken feed, and 
special feed grades of the A, B, C and D classes, 
were devised to suit the occasion. Practically the 
entire crop of North Dakota wheat that year was 
purchased as feed and the price of this wheat 
ranged from 40 cents to $1.05 per bushel under the 



54 The Modern Farm Cooperative Movement 

ordinary grades at which the farmers had for- 
merly sold their wheat. As a consequence the 
farmers of North Dakota lost millions of dollars 
on that one crop, and their rage and chagrin can 
be imagined when it was afterward discovered 
that the mills of Minneapolis not only manufac- 
tured this wheat into flour but had the audacity to 
claim superior quality for this flour on the ground 
that it was unusually rich in gluten — absorbed a 
large amount of water and made an exceptionally 
large loaf of nutritious bread. Copies of the cir- 
cular letters which the millers sent out to their 
trade advertising this flour came into my posses- 
sion and enabled me to expose this gigantic swin- 
dle which had been perpetrated upon the produ- 
cers of North Dakota. It was this fact more than 
any other that caused the farmers of North Da- 
kota to enroll in the Non-partisan League in such 
numbers. ' ' 

The causes of unrest spring out of fundamental 
grievances and abuses which are in large part due 
to the present marketing system. They may be 
enumerated as follows : 

1. Surplus production. 
1 2. Price fixing by middlemen. 

3. Disorderly marketing. 

4. Discrimination in fixing grades. 

5. Abuses of the marketing agencies. 



CHAPTER FIVE 

Orderly Marketing 

Commerce, said Emerson, is carrying things 
from where they are plentiful to where they are 
needed. There is much implied in this thought. 
It signifies, first of all, an efficient effort at distri- 
bution, for that is all that business means in the 
last analysis. If everyone had all that he needed 
or desired of the world's goods, there would be 
no business, no human effort expended beyond the 
primitive instincts of hunger and shelter. But we 
require a multitude of things, and this demand 
increases with the complexity of our civilization. 
Business, commerce is the production and the dis- 
tribution of the things which will supply those 
wants. 

It is significant to note that Emerson placed the 
emphasis upon the distribution of products; of 
course, it implies that the things must be produced 
before they can be carried from place to place, but 
the emphasis is upon the distribution side. In- 
deed, this is not unique. For three-quarters of a 
century we have, in this country at least, laid the 
emphasis there, regardless of what our business 



58 The Modern Farm Cooperative Movement 

side of his business. He must give thought to 
marketing and to efficient marketing. The Ameri- 
can farmer does not propose to give up without a 
struggle. Hence the great attention at the present 
time and the great agitation for orderly mar- 
keting. 

There is nothing mysterious about orderly mar- 
keting; it is not a radical program, nor is it social- 
istic in principle. It merely means that the 
artificial restraints now imposed upon our mar- 
keting system shall be removed so that the law of 
supply and demand may function in its normal 
manner. 

The periodical glutting of the markets following 
the harvest has resulted in depressing the prices 
of commodities below the point where they should 
properly go, had the markets been fed in an 
orderly manner. It is not at all unusual that the 
markets should refuse to react properly when 
they are being glutted with an over-supply. There 
is no commodity in the world which reacts faster 
to an over-supply than food. If you are hungry, 
you will gladly pay a dollar for a dinner, but you 
will not pay ten cents for the best meal in the 
world fiYQ: minutes after. 

*^The great need in marketing today is to have 
farm products fed to the markets of the country 
without market glutting. This can be done by 



Orderly Marketing 59 

proper organization. The stable prices resulting 
will be of incalculable benefit not only to farmers 
and consumers but to the majority of middlemen 
as well.''* 

Many people have held to the opinion that the 
great difficulty lay in the fact that there has been 
lack of uniformity in the production of farm 
products, rather than to any especial faults of the 
present marketing system. ^ ^ The farmer ought to 
stop producing so much. He ought to find out 
what the market can handle and then regulate his 
business like any other business man would," they 
argue. But farming is not a business that will 
permit of uniformity in production. As a rule, the 
peak of production comes in the summer and fall, 
when the demand for foodstuffs is not so great as 
during the winter. Many of the farmer 's products 
are produced in a single month or two of the year ; 
his production is at the lowest ebb during the win- 
ter months. This makes it necessary for him to 
grope more or less in the dark as to the amount he 
should produce because he has to plan his opera- 
tions at least one year in advance of market re- 
quirements, and in some instances, two years. 

Since the peak of the farmer's production must 
come in a few months of the year, considerably 



* The Eoad To Better Marketing, Cir. 136, Univ. Wis. (1921), 
p. 1. 



60 The Modern Farm Cooperative Movement 



Fig. 7. 

HOW PRICE FLUCTUATIONS CAUSING ERRATIC PRODUCTION 
AFFECT BOTH THE FARMER AND THE CONSUMER. 




-Wisconsin Bulletin 136. 



Orderly Marketing 



61 



more than it is possible for the market to consume 
or use, and in other months there is little or no 
production, it is obvious that the production will 
exceed the demand in some seasons and be less 
than the demand in others. Production cannot be 
stabilized in the sense that it is in other industries, 
like manufacturing, for instance. 

Fig. 8. 

HOW FLUCTUATING PRICES INFLUENCE THE PRODUCTION OP 
HORSES AND HOGS. 



INDEX NUMBERS OF PURCHASING POWER OF HOGS a>JORSES 1 

HOSS. VALUE PER HEAD I9r0-|4- 100 HORSES, VALUE PER HEAD l9IO-l*.tOO j 


100 
50 


[ 


















A ''■' 


l\ 




- 

" ri 




/ X 












<' 


\i ^ 


\ ■ 


50 


rH 
-i 

■| 1 


MM 


•/ 

MM 


MM 


MIL 


11 M 


__LlJJ_ 


J_Ll 1 


1 M L_ 


J_J_L_L 


1 1 1 1 


1870 
1875 
1880 
1885 
1890 
1895 
1900 
1905 
1910 
1915 
1920 



Purchasing power of hogs and horses in the United States. Periods of 

relatively high and low prices for hogs come at frequent intervals. Horses 

have longer and more violent periods of over and under production. 

— U. S. Dept. Agri., Bui. 999. 

It has been this periodical glutting of the mar- 
kets in certain seasons, due largely to the nature 
of the farmer's business and the fact that his 
financial obligations have been made to mature at 
harvest time, which have caused the violent fluc- 
tuations in prices. Lacking a systematic organi- 
zation in his business as a whole, the farmer has 



62 The Modern Farm Cooperative Movement 

been unable to prevent this seasonal glutting of 
the markets, and '^conditions'^ have been such as 
to encourage the middlemen who absorb the 
market offerings to depress prices as far as they 
can safely go in order to buy their raw material 
as cheaply as possible. Then when the glutting 
has ceased and the oversupply withdrawn from 
the open market, then prices have continued to 
mount as high as the public would stand for it. 
This means, as high as there was ability to pay on 
the part of the consumers. 

The first step in bringing order out of chaos is 
to adopt the principle of orderly marketing. The 
glutting of the markets must be stopped before 
we can give proper attention to the production 
side of farming. The limitation of production can 
never bring about the desired results so long as 
the menace of disorderly marketing threatens 
the farmers. We cannot hope to remedy the situa- 
tion by swinging around and attempting disor- 
derly production. Seasonal glutting of the mar- 
ket, even in a normal production year, depresses 
prices. That must be corrected before we can turn 
to other considerations. 

''The surplus which causes the flooding of the 
markets," says Macklin, "is not caused by any one 
farmer alone but by all the farmers producing a 
given product. .. .This, therefore, is not a local 



Orderly Marketing 



63 



Fig. 



SEASONAL PRODUCTION IN PEAS. 



80 
70 



k50 



(0 













Q Production 












1° 


IN 
PPI 

r9 


Ju 


LY 


;AS 
HS 












^t^^l 












-8 


2,i 


o - 














Average monthly ^■■■Consump' 

1 1 1 1 ■■■ 


"ION 



JAM MAR MAY JULY SEPT NOV 



Pea production entirely seasonal. 

Few products are matured in such a short season as peas for canning pur- 
poses. Were it not for organization most of the crop would have no 
value at all. Price stabilization has been realized to a great extent by 
relatively efficient distribution of the finished product, 

— Wisconsin Bulletin 136. 



64 The Modern Farm Cooperative Movement 



Fiff. 10. 



«4 



(2 



to 



6.3/0 Average 



rHis:: 

^ Shows 

Surplus; 
Productiok 



Monthly 

ION 




JAN MAR MAY JULY SEPT NOV 



CHEESE. 



and individual problem but a country- wide group 
problem. The only way to hold this surplus back 
so that prices will be stabilized is to have all or 
most of the farmers of the industry organized for 
orderly marketing. 



>>* 



The Road To Better Marketing, p. 3. 



Orderly Marketing 65 

It is this thought, more than any other, which 
has been responsible for the growth of the farm 
cooperative movement throughout the world and 
none the less so in the United States. Were indi- 
vidual production possible on a large scale, as it is 
in manufacturing, the farmers would have long 
since settled the matter as individuals. But farm- 
ing cannot be conducted, and is not conducted 
on a scale sufficient to make any great impres- 
sion, so far as individuals are concerned, on the 
market. Even the production of a highly special- 
ized crop such as potatoes is not in the hands of a 
few growers. Our average consumption of pota- 
toes in this country in normal crop years is one 
million bushels per day, yet the individual grow- 
ers in this country who produce 100,000 bushels of 
potatoes annually could probably be named on 
the fingers of one hand. 

The orderly marketing program which the 
farmers have mapped out for themselves contem- 
plates the achievement of price stability through 
cooperative marketing agencies of two distinct 
kinds: (1) the local units and (2) the state or 
sectional federations. 

These cooperatives are necessarily divided into 
distinct commodity groups, such as grain, live 
stock, potatoes, wool and creameries (in the mid- 
dle west) and in other localities into even more 

5 



66 The Modern Farm Cooperative Movement 

highly specialized groups. The province of the 
local units is to act as collector and shipper of the 
local products. It is merely a local agent or buyer, 
such as local elevators, live stock shipping associa- 
tions, creameries or wool shipping associations. 

The federation of all of these local units in a 
given commodity group is generally located at the 
logical terminal market for the product. It may 
have branches at other terminals. Its business is 
that of general sales agent, packer and distributor 
of the product to the logical consumers. Most of 
this business is conducted in a wholesale way, as it 
should be. No attempt is being made, nor should 
be, in these federation movements, to conduct 
retail stores as a further link in the chain. The 
true cooperators are anxious to utilize the services 
of every legitimate middleman. The fact that 
farmers' cooperative stores are in operation in 
some localities has nothing to do with this newer 
program. They are a matter of local initiative 
in which the farmer has not acted so much as a 
farmer, but as a member of the consuming class. 

** Efficient marketing, '^ continues Macklin, ^* ne- 
cessitates organization because, while certain 
services are best rendered by small local units, 
other services — especially those phases of storing 
and distributing which result in market feeding 
and price stabilization — can be gained only by the 



Orderly Marketing 67 

development of large scale federations or selling 
systems. If farmers want a system of improved 
marketing they must practice consolidation, coor- 
dination, cooperation .... If successful local enter- 
prises are to prevent the alternate starving and 
flooding of markets with consequent seasonal price 
fluctuations, they must coordinate all their selling 
activities. Particularly must they work together 
under a definite plan that will guarantee sufficient 
business for each federation to maintain a staff of 
experts to : 

*'l. Collect accurate supply and demand facts; 

''2. Store the surplus seasonal production for 
sale in seasons of deficit production ; 

^^3. Advertise branded products which have 
been rigidly graded and represent standardized 
dependable quality; 

**4. Feed markets and thus stabilize prices so 
that farmers may be protected against the haz- 
ards of price fluctuation. 

*■ * These hazards now seriously affect productive 
operations and interfere with the maintenance of 
satisfactory conditions in rural life.^' 

Production has been claimed to be at the bottom 
of price fluctuations by those who are friendly to 
the present system and who feel that the farmer 
** should mind his own business'' and continue to 
produce, but it is likewise a fact that price fluctua- 



68 The Modern Farm Cooperative Movement 

tions have had a serious effect upon production. 
The United States Department of Agriculture has 
said: 

*^ Violent changes in the price level result in 
violent changes in industry. If the price of a 
particular product is not favorable, its production 
is checked, but the price does not fully respond to 
the reduced effort until the product that is already 
in the process of production and merchandising is 
nearly exhausted. Prices then rise and new pro- 
duction begins, but the new efforts at production 
have only a limited effect on prices until the new 
goods have passed through the process of pro- 
duction and merchandising. The length of time 
that the prices of a particular product remain high 
or low, therefore, depends largely on how long it 
takes from the beginning to the completion of the 
product. Other factors are, of course, involved. ' '* 
' Orderly marketing, so far as the farmer is con- 
cerned, can not occur so long as the surplus of his 
products continues to fall into other hands. The 
incentive to depress prices in order to buy cheaply 
is too great, and the subsequent incentive to ele- 
vate prices in selling to the consumer is sufficient 
enough to admit of no material reduction in the 
national cost of living. The first great need is for 
the erection of storage facilities for surplus farm 



Dept. Agri., Bui. 999, Prices Farm Products, Warren, p. 7. 



Orderly Marketing 69 

products, owned and controlled by the farmers, so 
that true orderly marketing may be brought about. 

'^The most important things farmers should 
work for,'' said the secretary of agriculture, re- 
cently, ^*are the perfection of their cooperative 
selling organizations with a view to putting the 
marketing of farm products on a thoroughly 
sound business basis, and the careful study of 
needs of the consumer and intelligent adjustment 
to those needs.'' 

Orderly marketing will result in many distinct 
improvements over the present system. The fact 
that the farm cooperative movement is being so 
strenuously opposed all along the line, is eloquent 
testimony of this fact. It will result in : 

1. The elimination of violent price fluctuations. 

2. A more uniform production. The farmer can 
operate with less chance of huge losses. 

3. The reduction of marketing waste. 

4. Greater economy in marketing, enabling the 
farmer to secure a larger share of the consumer's 
dollar. 

5. A lower cost of living to the consumer, be- 
cause of the elimination of the violent fluctuations 
in prices and production. 



PART II 

THE LOCAL MOVEMENT 



CHAPTER SIX 

Local Cooperatives Generally 

The local cooperative organizations are at once 
the strongest and the weakest links in the farm co- 
operative movement. They are, in the very first 
instance, the most important units in the cooper- 
ative plan of action, because they are the corner- 
stone upon which the Avhole movement must rest. 
They are the units which are in most intimate con- 
tact with the individual farmer-members, and 
where the quality of the cooperative spirit must 
have its highest form, if the whole movement is to 
attain any great success. 

On the other hand, the local cooperatives are 
often a very weak elenient and the cooperative 
movement would be well rid of a large number of 
the local cooperatives which were poorly executed 
in the beginning. In far too many communities, 
local enthusiasm has been allowed to run away 
with sober reason and cooperatives of various 
kinds have been launched which never should have 
been started. These w^eak locals have done more 
to discredit the whole idea than anything else. 

Failures are bound to come to cooperatives 
which have been organized without proper refer- 



74 The Modern Farm Cooperative Movement 

ence to the volume of business to be transacted in 
the trade territory; failure is likewise certain to 
attend the organization of locals inadequately 
financed, poorly managed and under the domi- 
nance of a niggardly business policy. 

A local organization having a small volume of 
business in sight is not in a position to pay for the 
proper type of management necessary to insure 
success. It must depend almost entirely for man- 
agement upon some member who is willing to un- 
dertake the work for a small salary, who, in the 
majority of cases, has no knowledge whatever of 
the business himself, and who must conduct the 
doubtful experiment of learning it as he goes 
along. And the sad part about it is that the trust- 
ing members of the organization are holding the 
sack while this is going on. It is this sort of thing 
which has been responsible for the high rate of 
mortality among the farmers' cooperative asso- 
ciations in the past, and which has given credence 
to the erroneous thought that ^Hhe cooperative 
principle will not work, because they always fail. ' * 
The trouble has not been with the idea, it has been 
with the management to which the idea was en- 
trusted. 

On the other hand, where local cooperative con- 
cerns have been wisely launched, with due refer- 
ence to the possibilities of transacting a profitable 



Local Cooperatives Generally 75 

business in the logical trade territory to be served, 
where the financing has been ample and judicious, 
and where the best managers that money could 
hire were employed, some of the most outstanding 
achievements in the cooperative movement have 
been made. 

The central idea back of the local cooperative 
is service, not profit. In earlier times it was nec- 
essary to organize many of these concerns into 
capital stock companies, or corporations, because 
of lack of legal facilities to form a true coopera- 
tive concern. It is significant to note that the 
farmer has never desired to enter business to earn 
profits, and when he has come into a given busi- 
ness, he has come with the idea of saving the un- 
necessary profits of middlemen. His idea is to 
shorten the route from the farm to the consumer, 
to eliminate waste and duplication of effort. He 
would, thereby, profit to the extent of the unneces- 
sary profits or toll taken by others, which he was 
able to dispense with in the marketing service. 

The true cooperative is organized more or less 
as a loosely thrown-together association having 
more or less the characteristics of a private cor- 
poration for profit, but looking rather to the serv- 
ice feature in the mission it frankly attempts to 
perform. The business is conducted at cost for 
the benefit of stockholders and patrons alike, the 



76 The Modern Farm Cooperative Movement 

one having no advantage or special privileges 
over the other. The only distinguishing feature 
between the stockholders and the patrons is that 
the stockholders are paid a certain agreed interest 
upon the money which they have invested in the 
business. The locals are generally conducted at 
the same charge or commission asked by the 
old-line companies or concerns in the same line, 
and, at the end of the year, the savings are divided 
among the stockholders and patrons in the form 
of patronage dividends, based upon the amount of 
business which each individual has furnished the 
concern. Thus, the man who does the most in 
building up the business of the local during the 
year profits to the largest extent in the patronage 
dividends. This division of the profits is the most 
equitable and fair which has been found in our 
business world to date. 

The patronage dividend which the members and 
patrons receive is not the only advantage arising 
from the local concern. Through collective bar- 
gaining for the whole community in the sale of the 
particular product handled, the individual mem- 
bers or patrons secure all the benefits which a 
large corporation could secure on the terminal 
markets. Competition, theoretically, has been 
eliminated by the cooperation in a single unit, 
among the individuals in the community. They 



Local Cooperatives Generally 77 

can all go to the terminal markets with their prod- 
ucts on an equal footing. Their competition, as 
individuals on the local market, has not been used 
to depress the prices of their products at their 
very doorsteps. 

Another great advantage which the local coop- 
erative business associations has brought to the 
farmers has been the better spirit which they have 
fostered among the farmers themselves. The 
farmer has ever been more or less of an individ- 
ualist; indeed, some very good authorities have 
inclined to the belief that this deep-seated spirit in 
the farmers would forever prevent them ^'getting 
together '' in a durable fashion. The local busi- 
ness associations have been of untold value in fos- 
tering the true cooperative spirit, in softening the 
old lines of suspicion and distrust for the neigh- 
bor. And this spirit, once it becomes general will 
do much to liberate rural life of many of its past 
deficiencies. We can thank these early cooper- 
ative business organizations as being pioneers in 
this movement ; as being the fountain-head of the 
present new spirit which is characterizing the 
farmer of today. 

That a new spirit of fair play is moving the 
farmers of America, a spirit which has never been 
announced by any other ''class'' in all history, is 
evidenced in the following quotation from Presi- 



78 The Modern Farm Cooperative Movement 

dent J. R. Howard ^s introduction to *'The Farm 
Bureau Movement'' by 0. M. Kile: 

<< Agriculture cannot set itself up as something 
independent and apart. In our modern state of 
complexity agriculture is as dependent upon the 
city as the city is upon the country. If organized 
agriculture acts wisely and sanely there will be no 
cause for alarm on the part of the consumer, the 
business man, or even the honest straight-forward 
politician. Strife usually comes through misun- 
derstanding. The success of the farmers' move- 
ment in fitting itself into the social and economic 
structure smoothly and with mutually beneficial 
results, depends upon a thorough understanding 
on the part of the urban public of its motives and 
purposes.'' 

The local cooperatives are going to work more 
and more to this end because, as their success 
grows, they will hold together the local member- 
ship. People will come together with a common 
purpose where their pocketbooks are at stake, 
where they will never come together under other 
conditions. The business necessity of close co- 
operation is going to foster the spirit of coopera- 
tion more and more in other directions. That is 
an inevitable advantage of the local units. 

In the main, the local cooperatives are the 
foundations of the other efforts towards coopera- 



Local Cooperatives Generally 79 

tion. They have been the beginning out of which 
has come the other and more modern growths. 
And the larger movements depend absolutely upon 
the locals for their power and existence. Their 
very life blood is drawn from them. In the study 
of the cooperative movement as a whole, then, the 
importance of the local cooperatives, which may 
seem puny as individual business concerns, can- 
not well be over-estimated. 



CHAPTER SEVEN 

Local Elevators 

Changing the ownership of our existing mar- 
keting agencies and their facilities is not the large 
work of cooperative marketing on the part of 
farmers. If cooperation were advocated merely 
because it would wrest the control of these agen- 
cies from one set of individuals and transfer it to 
another, there would be little to commend in the 
program. But cooperation exists for the single 
outstanding reason that it offers a possibility of 
performing a service for society apart and distinct 
from the service now performed by agencies serv- 
ing the same field that are privately owned. If the 
cooperative movement does not oifer to perform 
this service, then it will not, and does not deserve 
to succeed. Lacking this service, it will be merely 
another overhead organization taking its toll from 
the producers and consumers of the land. 

The service to which we refer is more efficient 
marketing. Doing the same work and doing it a 
little cheaper. Cutting out the waste incurred in 
private ownership and management where the sole 
criterion of profit is to charge all that the traffic 
will bear. Affording storage facilities whereby 



Local Elevators 81 

the individual farmer, by pooling his grain and his 
resources, may store it, to market later in the sea- 
son when prices have commenced to mend. Sink- 
ing the old hoax of individualism among farmers 
and bringing them together in common purpose, 
fostering the community spirit and developing, in 
the end, that greatest of all the fruits of coopera- 
tion, the cooperative spirit. These are the larger 
reasons for the cooperative marketing movement; 
the larger reasons why it stands as a solution 
today for the economic problems which so seri- 
ously beset the agriculture of this country. 

Particularly significant in the cooperative mar- 
keting movement among farmers is the ownership 
by farmers of local grain elevators. The local 
elevator is possibly the pioneer among farmers' 
cooperative marketing agencies; if not, then it is 
antedated only by local creameries. The local 
elevator movement started back in the early '90s 
in response to the feeling of unrest current among 
farmers at that time, who felt, as many do today, 
that they were not getting a fair shake in the 
marketing of their grain. It is natural that the 
first step the farmers should take would be in 
acquiring the ownership and control of the local 
elevator, for it was there that they first came into 
direct contact with the grain trade. 



82 The Modern Farm Cooperative Movement 

0. M. Kile, in his work on ^^The Farm Bureau 
Movement, ' ' states : ' ^ The most vigorous sort of 
opposition was encountered and for a time this 
movement made small progress. The strongly in- 
trenched line elevators, usually owned by big mill- 
ing and financial interests, enlisted the aid of the 
railroads in refusing siding privileges, ^forget- 
ting' to furnish cars and ^losing' shipments. The 
banks refused credit at critical times. In many 
instances where farmers were about to form a 
local organization the rival concern sent in or- 
ganizers and arranged for a ^cooperative' elevator 
which was cooperative in name only. Many of 
these still exist. 

*^By 1910 much progress had been made in 
many states, however, and in 1915 Illinois had 192 
farmer-owned elevators; Iowa, 228, and North 
Dakota, 264. Since 1915 the movement has been 
quite rapid and it is officially stated that today 
(1921) there are more than 4,000 such elevators 
in active operation, largely in the middle west. ' ' 

Perhaps an intimate examination of two ele- 
vators which the author has personally visited 
will serve to graphically present to the readers 
the local elevator, the field it serves, and the pur- 
poses and policies back of its organization. One 
of these elevators is located in southern Missouri 
and the other in central Minnesota. 



Local Elevators 83 

Down in Jasper county, Missouri, there is a real 
cooperative service station. We refer to the 
Farmers' Cooperative Elevator Company of Jas- 
per. Organized in 1916, with $15,000 paid up 
capital, it stands today a living example of what 
can be accomplished along cooperative lines by 
serious-minded farmers when their ehoulders are 
put to the wheel and all work together for the com- 
mon good. 

Jasper is a town of about 700 population lo- 
cated in the north end of Jasper county, on that 
great plain above Carthage starting over in Kan- 
sas and running east to the Ozarks. It is right in 
the heart of the southern Missouri grain-growing 
section where considerable small grain is pro- 
duced each year. About 400 stockholders living 
around Jasper are responsible for the Farmers' 
Cooperative Elevator Company. They have con- 
structed one of the finest elevator plants owned 
and controlled by farmers now in existence in the 
middle west. Their elevator and feed mill cost 
$10,000 to erect in 1916, is fireproof throughout, 
being constructed entirely of concrete and brick. 

^^The fact that we are a stock company should 
not be taken to mean that we are a closed corpora- 
tion,'' said J. E. Hull, who has been manager 
practically all of the time since the company was 
organized. *'We have men outside the organiza- 



84 The Modern Farm Cooperative Movement 

tion who have been patrons since we started. 
While they do not participate in the dividends 
paid, the big advantage from our company does 
not come from that source. The advantage we 
offer to the patron is that we are paying closer to 
the market, sometimes as much as 10 cents per 
bushel, more than our competitors can pay. One 
man was in the office the other day who said that 
the company had been worth $300 to him since he 
started dealing with us in the saving we had made 
for him in this way; another man said that it had 
been worth $1,000 to him on one crop. Neither of 
these men were stockholders in the company.'' 

In 1921 the Farmers' Cooperative Elevator 
Company shipped 96 cars of grain averaging 1,500 
bushels to the car. Two years before it shipped 
250,000 bushels of wheat. ^^ There is one point to 
be made right here," said Manager Hull, as we 
were discussing the shipments made, ' ^ and that is 
the kind of cars in which to ship grain. I believe 
other farmers' cooperative companies will be in- 
terested in our experience. Stay shy of small 
cars. An 80,000 pound car, for instance, will hold 
2,000 bushels of w^heat, while a 60,000 pound car 
will hold only from 1,000 to 1,100 bushels. This 
may not seem to indicate a great deal at first 
glance, but when you stop to consider that the 
larger car can be loaded for the same labor that 



Local Elevators 85 

the smaller car can be loaded, you begin to see 
where the advantage lies. You can save a tre- 
mendous amount in the course of a year, in labor 
of handling, by insisting that the railroad com- 
pany deliver the larger cars to you. ' ' 

And this is, perhaps, one of the reasons for the 
success of the Farmers' Cooperative Elevator 
Company under the management of Mr. Hull. He 
is a safe, conservative business man, but neverthe- 
less keen and alert to take advantage of every 
legitimate business opportunity to save money in 
performing the service for which his company ex- 
ists. And that is just the sort of management a 
cooperative marketing agency must have if the 
fond dreams which we have for them in the world 
of business are to be realized. 

The story of the organization of the Jasper 
concern is the old, old story marking the birth of 
full many a farmers' cooperative enterprise. It 
was organized as a result of the dissatisfaction 
held by the farmers and grain growers in and 
around Jasper for the methods pursued by the old 
line elevator in the town. 

^^They felt," continued Mr. Hull, ^Hhat they 
were not getting a square deal. This company 
was paying 30 cents per bushel less than the Kan- 
sas City price for wheat, which price was also too 
low. The Jasper price should have been higher 



86 The Modern Farm Cooperative Movement 

where tke Kansas City price was so low, because 
we have found that less margin is required for 
self -protection when the base price is low than 
when it is high. In fact, where the prices of grain 
are high you have to have a good wide margin in 
order to protect yourself against sudden and vio- 
lent price fluctuations which come when prices are 
high. 

^^Well, we organized our company, selling the 
stock at $25 per share. We had slight difficulty 
in the organization work because, as I have said, 
feeling was pretty general around town that we 
were not getting a square deal. As soon as we 
opened our doors for business we commenced to 
pay within 10 cents of the Kansas City price. In- 
stead of making a huge failure of the whole busi- 
ness by this drastic move, we have proved that 
our original contention was correct and that the 
old line elevators were taking too large a toll in 
the margin they claimed to be necessary. 

^*One man was paid $1.50 per bushel for his 
wheat by the other concern and the same week he 
brought us some wheat for which w© paid him 
$1.75 per bushel. The difference in price paid 
him amounted to a saving of $250 on that one lot 
of wheat we handled for him. You may be sure 
that that was an eye-opener for him and for a good 
many other people in the community.'' 



Local Elevators 87 

In addition to the business of handling grain, 
the bulk of which is wheat, the Farmers ' Coopera- 
tive Elevator Company handles coal, feeds, cotton- 
seed meal, oil meal, tankage — in short," does a gen- 
eral feed business. A great deal of the feeds are 
ground in its own mill and various rations are 
compounded in the mill room for the benefit and 
advantage of the stockholders and patrons. 

Practically since its organization the coopera- 
tive concern has been paying annual dividends of 
8 per cent. In 1920 the dividends paid on the cap- 
ital stock amounted to 10 per cent, and in Decem- 
ber, 1921, dividends equal to 25 per cent were de- 
clared, practically all of which were made out of 
the undivided profits accumulated in other years. 
The actual net profit made by the Farmers' Co- 
operative Elevator Company in 1921 amounted to 
only $191. But this is not to be sneezed at. For 
in 1921 full many a grain concern in the middle 
west dropped its thousands of dollars in the cha- 
otic days following the peak of prices in 1920. 
The year 1921 was a sad and serious year for 
grain elevators all over the country. The wonder 
is that the casualties in this great economic strug- 
gle were not greater. In 1919 the profits were 
$2,938.78; in 1918 they were $2,817.84; in 1917 
they were $3,686.02, and in 1916 they amounted to 
$1,486.48, all of which gives a fair indication of 



88 The Modern Farm Cooperative Movement 

what 400 stockholders made possible in savings to 
themselves and patrons, taking no account of the 
higher price paid for grain on delivery, through 
the organization of a company of their own. It is 
all the more remarkable when we stop to consider 
that it was done on a capitalization of only $15,- 
000, two-thirds of which was invested in equip- 
ment. 

The Farmers' Cooperative Elevator Associa- 
tion of Hutchinson, Minnesota, is one of the out- 
standing successes in the local cooperative move- 
ment in the state of Minnesota. Hutchinson is 
located in McLeod county and has a population of 
around 2,500 people. It is right in the heart of 
the best farming section of the state and in the 
most active center of the farmers' cooperative 
movement in the state. It was at Litchfield, a 
few miles northwest of Hutchinson that the first 
farmers' local live stock shipping association was 
organized in the state. Hutchinson is also the 
seat of a cooperative creamery which is one of the 
largest and most successful in the entire country, 
and down at Glencoe, in the same county, there 
are a number of successful farmers' cooperative 
concerns, among them a creamery, a flour mill, an 
elevator, a shipping association, a bank, and other 
organizations. 



Local Elevators 89 

The Hutchinson elevator was first organized 
about 1904 under the old corporation plan, which 
made it impossible for a real cooperative concern 
to find legal existence. It was conducted as a cor- 
poration owned and controlled by farmer-stock- 
holders until 1918 when it was reorganized under 
the then new Minnesota cooperative law which 
made it possible to pay patronage dividends upon 
the basis of the business transacted with the asso- 
ciation and not upon the basis of the shares or 
stock held or the capital invested with the concern. 

The company is capitalized for $25,000, of which 
$11,300 had been issued and paid up in 1920. This 
stock is divided into $25 shares and in 1921 there 
were close to 500 stockholders and more than 3,000 
patrons of the Hutchinson elevator. 

**We pay cash on the scales for our grain," said 
Mr. Walker, the manager, ^^and that means the 
market price. The dividends paid are based upon 
the state law which limits us to 8 per cent and is 
based upon the net earnings per bushel. For the 
1919-1920 season we paid dividends as follows: 
Three cents per bushel on wheat, rye and corn; 
and 5 cents per bushel on barley. We also paid 3 
per cent dividends on the flour and feed business 
transacted. 

^^I believe firmly in the patronage law and be- 
lieve that all farmers ' cooperative concerns should 



90 The Modern Farm Cooperative Movement 

be organized under this plan. In fact, I don't be- 
lieve that it is right to operate an elevator for 
profit. That is not the real purpose for which 
elevators exist, but such savings as are made 
should be distributed according to the support 
which the individual has given in building up the 
business by the patronage furnished and not ac- 
cording to the amount of money invested. 

*^ Although we have competition here in Hutch- 
inson, we practically set the price on everything 
we handle. Last year our business in flour and 
feed amounted to $100,000, and two years before 
we did not sell a dime 's worth in these lines, show- 
ing the rapid growth that is possible where your 
people stand behind you. The total volume of our 
business for the year ending in July, 1920, was 
$B00,000. 

' * In buying our flour and other supplies for our 
members we buy nothing from jobbers, but deal 
direct with the manufacturers at all times. In 
this way we save as much as possible in the cost. 
If a farmers' elevator gets lined up with a good 
flour mill it can get stock in small lots or can get 
mixed cars, so that a large volume is not necessary 
in order to induee a good mill to do business with 
you. ' ' 

In addition to doing a general grain business, 
the Hutchinson elevator handles the following 



Local Elevators 91 

lines of feeds and f eedstuffs : bran, flour, coal, salt, 
red dog flour, flour middlings, standard middlings, 
low grade flour, oil meal, cottonseed meal, 43 per 
cent protein, gluten feed, hominy feed, tankage, 
beef scraps, sugar, coffee, tires, including tubes 
and casings, graham flour, rye flour, and, in addi- 
tion, runs an employment bureau for the benefit of 
members and patrons. 

There is, of course, some legitimate objections 
to be made to the farmers ' cooperative enterprises 
entering too many other fields in their enthusiasm 
to render the maximum service to the farmers of 
the community. We have visited many local ele- 
vators where it seemed that the real business in 
hand was to run a general store and feed mill and 
elevator all combined. Some of these concerns 
were even handling lead pencils and tablets, shoes 
and dress goods. 

We have said many times that the ultimate hope 
of success in the farm cooperative movement lays 
in the direction of performing a service which can- 
not be performed by existing marketing agencies 
— in giving the producer a more efficient system of 
marketing. We do not believe that the farmers' 
cooperative movement should be used as a club 
over the heads of any legitimate business enter- 
prise unless there is a sincere belief that the farm- 
ers themselves can enter that field and more effi- 



92 The Modern Farm Cooperative Movement 

ciently perform the service demanded. Unless the 
farmers can efficiently enter the mercantile field, 
for instance, we do not deem it wise for them to 
carry on a sniping program in conjunction with a 
grain elevator or some other business which, at 
best, can only cripple private business in a direc- 
tion where they cannot erect their own business 
enterprises. 

That is not all. The spreading of the capital of 
the elevator or mill or creamery into these other 
side-lines tends to weaken the whole structure and 
make it less likely to render efficient service in 
the main purpose for which it exists. We believe 
thoroughly in the principle of cooperation and be- 
lieve that if rigidly conducted it will afford a 
greater profit to the producer and at the same time 
lower the cost of living to the consumer. But no 
farmer-owned-and-contr oiled business can afford 
to run a notion counter. The average farm co- 
operative concern is short on capital as it is to 
properly conduct its business, and we believe in 
keeping the main goal in mind at all times and 
foregoing the constant temptation of the pennies 
here and there in side lines. 

Of course, there is a difference of opinion on 
this point and many managers do not agree with 
the contention advanced; or, frankly admit that 
they would gladly rid themselves of the **nuis- 



Local Elevators 93 

ance" of the side lines but for the fact that the 
stockholders want it or there is pressure from 
over-enthusiastic members which cannot be 
denied. These things will, in the course of time, 
tend to work themselves out, but this one point 
has done more to antagonize local merchants and 
business men against the good faith of the farm- 
ers' cooperative enterprises than any other one 
thing. 

The financial statement of the Farmers' Co- 
operative Elevator Association of Hutchinson, 
embodied in the report of the public accountant 
employed to examine the records, is as follows : 

**From this report it appears that your net 
worth or assets are $24,012.63, represented as fol- 
io wr : 

Current Assets 

Cash on hand or m bank $ 6,505.37 

Liberty bonds 6,000.00 

Accounts receivable 8,866.62 

Inventory grain on hand and in transit. 21,201.35 

$42,573.34 
Fixed Assets 

Elevator property $ 8,748.25 

Less reserve depreciation 1,167.25 

$ 7,581.00 
Total assets $50,154.34 



94 The Modern Farm Cooperative Movement 

Liabilities 

Brown Grain Co $24,057.91 

Storage grain 2,083.80 

$26,141.71 

Net assets $24,012.63 

*^ During the year (1919-20) your articles of in- 
corporation were amended so as to put you on a 
purely cooperative basis and the old capital stock 
of $3,970.00 has been retired and new stock is be- 
ing issued and now stands as $11,300.00. In the 
transfer the old stockholders received dividends 
of $50.00 cash and $25.00 in stock. 

< i rpjjg results for the present fiscal year indicate 
a gain of $7,062.98 out of which a patronage divi- 
dend of $5,559.01, as well as a reserve for depre- 
ciation of $874.82, leaving a net gain of $629.15. 

* ' The surplus account now stands as follows : 

Balance July 1, 1919 $28,729.47 

Gain for period 629.15 

Old stock retired 3,970.00 

Dividends to date, stock, cash $26,175.00 

Reserve 6 per cent di\ddend 678.00 

Balance as per books 6,475.62 

$33,328.62 $33,328.62 

^'In 1^918 you paid an income tax of $7,359.16 on 
the supposed income of 1917, but it appears that 



Local Elevators 95 

an error was made in arriving at the net income 
and an application has been filed with the govern- 
ment for a refund of $3,717.52. This has not yet 
been acted upon by the government and has not 
been set upon the books. 

*^The patronage dividend of $5,559.01 referred 
to was based as follows: 

66,583 bushels wheat at 3c $1,997.49 

6,959 bushels barley at 5c 347.95 

3,970 bushels corn at 2c 79.40 

11,139 bushels rye at 3c 334.17 

93,333 bushels flour and feed at 3c 2,800.00 



$5,559.01 

**The cash receipts and disbursements involved 
in the handling of your business runs up close to 
$500,000.00 and you will appreciate that the keep- 
ing of proper records embracing such a volume of 
business entails a great amount of labor and the 
results would seem to reflect credit upon your 
board and their manager, Mr. Walker. ' ' 



CHAPTER EIGHT 

Local Live Stock Shipping 

The live stock shipping association was the 
next link forged in the local farm cooperative 
movement. It did not come until ten or more 
years after the local elevator movement got under 
way; in fact, the first local live stock shipping as- 
sociation organized in Iowa was organized in 1904 
and the first in Minnesota came some years later. 

The immediate cause prompting the organiza- 
tion of cooperative shipping associations to handle 
the farmers^ live stock was usually a feeling of 
dissatisfaction with the manner in which the ship- 
pers were being treated by the local live stock buy- 
ers. First, it was dissatisfaction with the price 
paid which the farmers did not feel was close 
enough to the terminal market price; and, then, 
there later came the feeling that the local buyers 
were merely agents of the packers and the stock- 
yards interests and were not in sympathy with the 
farmer and producer. But price levels had the 
most to do with the launching of the movement. 

The live stock producer soon found that his 
market was subjected to greater price fluctuations 
than probably any other market for farm prod- 



Local Live Stock Shipping 97 

ucts. He saw no way of stabilizing these prices 
or of increasing the price to be received for his 
products. It is natural, then, that he should have 
turned his attention to a consideration of the ways 
and means whereby the lines between producer 
and consumer might be materially shortened and a 
saving made to him out of the costs of distribu- 
tion. The original idea of a local live stock ship- 
ping association doubtless had its inception in the 
example of the local grain elevator. If the grain 
producers could cooperate in the sale of their 
product and make such substantial savings, why 
could not the live stock producers do the same f 

In spite of the fact that the local elevator move- 
ment antedates the live stock shipping movement, 
there is slight doubt but that the latter move- 
ment is more widely distributed today over the 
farming sections of the country and in a much 
more influential position today than the local ele- 
vator. By this we mean that local live stock ship- 
ping associations are more widely distributed and 
in greater numbers than local cooperative ele- 
vators, if only the true cooperatives are counted. 
The result has been that the local live stock buyer 
is practically extinct as a species not only in many 
localities, but in many states as well. 

In Extension Service Bulletin No. 85, issued by 
the Iowa State College of Agriculture in July, 



98 The Modern Farm Cooperative Movement 

1921, the following reasons for the organization of 
local cooperative live stock shipping associations 
are advanced: 

^^Two chief benefits are aimed at by live stock 
producers who organize themselves into coopera- 
tive shipping associations. 

'^1. Such an association enables them to sell 
their stock for just what it will bring in the ter- 
minal or local market centers and to return this 
purchase price to each shipper, deducting only the 
unavoidable stockyards charges, selling commis- 
sions, freight and local handling expenses. Many 
of the successful and well managed associations 
can show that they are handling their stock in this 
manner on a much narrower spread than ever be- 
fore and are securing savings of anywhere from 
15 cents to perhaps 75 cents a hundred on the aver- 
age. Some of them claim to be making savings of 
as much as $2 a hundred, but it is doubtful if the 
actual gain is as much as this on the average of 
business done over any considerable period of 
time, though undoubtedly even greater savings 
than this are made in individual instances, par- 
ticularly in the case of animals which are shipped 
only occasionally and for which there is not a com- 
petitive local market, such as veal calves or can- 
ner cows. , 



Local Live Stock Shipping 99 

^^Even if the actual saving amounts to only $20 
a car, this, on the basis of 50,000 cars shipped co- 
operatively, would mean a total saving to pro- 
ducers of $1,000,000 annually. 

^^2. The cooperative association enables pro- 
ducers to combine their small lots of stock into 
carlot shipment and forward them to market at 
whatever time suits their convenience. A con- 
stant market is provided and most well established 
associations have regular shipping dates once a 
week, twice a week, or at such other intervals as 
are worked out according to the railroad facilities 
and the amount of stock to be handled. ' ' 

That the local live stock shipping associations 
have grown tremendously in number and influence 
the past few years cannot be denied. In Wiscon- 
sin, for instance, the first association was organ- 
ized in 1908. By 1916 they were doing an annual 
business of $11,000,000, of which $1,500,000 was a 
clear saving to the farmer-members due entirely 
to their cooperative shipping. They have since 
steadily grown in number and volume of business 
transacted. In 1920 there were 500 of these ship- 
ping associations in Wisconsin alone. 

Bulletin 314 of the Wisconsin Agricultural Ex- 
periment Station, issued August, 1920, states: ^'A 
study of the business done by Wisconsin coopera- 
tive shipping associations in 1916 shows that there 



100 The Modern Farm Cooperative Movement 

were shipped to the central markets and to small 
industries 11,120 cars at an estimated value of 
over $11,132,000. This makes an average of 47 
carloads of live stock for each association. 

'* Since 1917 the volume of business handled by 
cooperative shipping associations has steadily in- 
creased. Many commission firms, which at one 
time were unwilling to handle the cooperative 
business, with all the extra work of grading, sort- 
ing and bookkeeping it entailed, now find that it is 
paying them to build up and solicit such business. 
Some firms advertise the fact that they have men 
who will go out and help to organize shipping as- 
sociations and put them on a firm, business-like 
foundation. The general belief prevails at South 
St. Paul and Chicago that the cooperative ship- 
ping has come to stay and is bound to grow in 
voliame.'' 

Unofficial figures coming into the possession of 
the author in 1919 indicated that the average an- 
nual business done by cooperative live stock ship- 
ping associations in Minnesota amounted to $500,- 
000. At that time there were 600 shipping asso- 
ciations in Minnesota, indicating that the farmers 
of the state were doing a business of close to 
$300,000,000 annually in live stock! It has been 
said by competent authorities that at least 75 per 
cent of all of the live stock going to the South St. 



Local Live Stock Shipping 101 

Paul market is shipped by local cooperative ship- 
ping associations. 

The live stock shipping association history of 
Iowa shows that in 1916 there were only 57 local 
farmers' organizations, and on January 1, 1921, 
the number had grown to 610. Since that time the 
growth has been even more rapid due to the in- 
fluence and activity of The Iowa Federation of 
Cooperative Live Stock Shippers. 

Some interesting facts are brought out in Bul- 
letin 547 of the U. S. Department of Agriculture, 
issued in September, 1917, as to the individual 
characteristics of these shipping associations. 
While the complexion of local live stock shipping 
associations has changed quite materially since 
that time, these figures are interesting and valu- 
able because they give a comparative basis of the 
status of the live stock associations all over the 
country. It is stated that the average member- 
ship of local live stock shipping associations was 
140 members or patrons ; that the average volume 
of business transacted amounted to $98,777 and 
the average business per member in the organiza- 
tion amounted to $706. While the amounts are 
low, in view of recent developments in this field of 
cooperative endeavor, the percentages will doubt- 
less be a fair indication of the worth of the asso- 
ciation to the individual member. 



102 The Modern Farm Cooperative Movement 

The manner in which shipments are handled by 
the cooperative shipping associations is interest- 
ingly set out in the Wisconsin bulletin above men- 
tioned: *' Where stock is to be sold separately 
at the central market it is necessary to identify 
each owner's shipment. It must be marked so as 
to be easily distinguished. Many systems have 
been tried, but the use of shears or clippers seems 
the most satisfactory except for sheep. In mark- 
ing sheep, paint or other colored fluid is generally 
used. 

^^ Weighing the stock at the home station is done 
mainly to give a reasonable check on the weight 
reported by the railroad and the commission firm. 
Payment to the owner is based on the weights at 
the central market unless there is reason to doubt 
the returns. 

^^In case of hogs, and sometimes sheep, instead 
of depending on marks and separate sales, the 
load is weighed, sold as a unit and the receipts 
prorated. This is the better way where there is 
no appreciable difference in the quality of the 
stock. Scale sheets are used, showing the number 
and kind of stock, weights, marks, dockage and the 
like. 

**A contract is entered into between the live 
stock shipper or shipping association and the 



Local Live Stock Shipping 103 

transportation company, supposedly covering all 
details necessary for mutual protection. 

^^Resolutions require the shipper to declare the 
money value of each head of stock shipped. The 
valuation at present allowed is : for steer, or bull, 
$75 ; for cow, $50 ; for calf, $20 ; for hog, $15 ; for 
sheep, $5. An additional 2 per cent is added to 
the regular freight rate for each 50 per cent, or 
fraction thereof, additional value on each head, 
up to and including $800. 

^'Live stock contracts are made in duplicate or 
triplicate according to the road. The shipper re- 
ceives the original and the freight agent retains 
the copy from w^hich he makes out the freight bill. 

^'Reports from 53 shipping associations, lo- 
cated in various sections of the state, show that 
the average transportation expense, including 
freight charge, terminal charge, fire insurance and 
war tax for the year 1918, was $36.52. Allowing 
for some omissions in the reports received of war 
tax, insurance and terminal charge, the average 
would be about $38. For mixed shipments the 
freight expense is from 10 to 25 per cent higher. 
Cooperation is the best means of eliminating this 
needless expense. One good-sized company at a 
station can do what several competing buyers can- 
not do in making up car lots of one kind of stock. 



104 The Modern Farm Cooperative Movement 

^ ' At all great live stock markets there are cora- 
mission firms or companies which receive the 
stock, take care of it at the yards, and act as a sales 
agency in disposing of it to the buyers. Many 
have felt that the commission charge might be dis- 
pensed with and the stock sold by the shipper di- 
rectly to the buyer, but this plan has many com- 
plications, so many that it is hardly likely to be 
put into practice. 

^^In the case of cooperative shipments the work 
of the commission men has been much more im- 
portant than with ordinary shipments. This is 
true because of the separate identification and sale 
of each farmer 's stock, and the detailed report re- 
quired in making the returns. * * * 

^^In several of the leading markets of the coun- 
try, farmers^ organizations have established com- 
mission agencies of their own. The great advan- 
tage to be gained from this is the concentration of 
the business into more economical units, thus 
effecting a saving. 

^^ After the stock has been sold the local man- 
ager receives a draft from the buyer and a full 
account from the commission firm. In some in- 
stances these returns show the amount due each 
farmer. In other cases the manager has a little 
figuring to do. Within a week at longest, and 
usually within four days from the time the stock is 



Local Live Stock Shipping 105 

shipped, the individual checks to the farmer are 
ready. 

'^Eeturns received from 70 shipping associa- 
tions relative to the expenses at the terminal mar- 
ket show that for selling, commission, yardage, 
feed and bedding charges, the average expense is 
$30 to the car. The range of expense is from $20 
to $40 a car. 

*'Eeturns received from 70 shipping associa- 
tions relative to the home expenses show that the 
average home expense, which includes manager's 
salary, labor and incidental expenses, and the 
amount put into the sinking fund, amounts to $25 
a car. The general average of expense for ship- 
ping associations will range from between $20 and 
$30 a car, though there are associations whose ex- 
penses are greater than $30 a car and some with 
less than $20. 

^ ^ Therefore, if we take the total freight expense 
as $38, the average terminal market expense as 
$30, and the average home expense as $25, the 
total average expense of marketing a carload of 
live stock, based on returns actually received from 
a large number of shipping associations, is found 
to be $93. This does not mean that there will not 
be a great variation from this amount. It is quite 
probable that the expense of marketing a carload 
of Wisconsin live stock will range all the way from 



106 The Modern Farm Cooperative Movement 

$50 to $150, or from 214 per cent to 7% per cent 
of tlie value of the carload. Shrinkage has not 
been included as an expense; nevertheless the 
greater the shrinkage incurred, the less will be 
the shipper's return.'' 

Fig. 11. 




• 3hipping flaaoclofion). " 

» ^ubordinoie Shipping fbf/rts 
a Butfin^ FbkTt3. 

COOPERATIVE LIVE STOCK SHIPPING ASSOCIATIONS IN IOWA 

IN 1920. 
— (lov/a) Extension Service Bulletin No. 85. 

The advantages coming to the live stock produc- 
ers who organize a local live stock shipping asso- 
ciation cannot be measured alone in the amount of 
money saved, although that is an important item. 
While the saving often runs as high as $250 per 
car and seldom less than $15 per car, one of the 
chief advantages is that membership in a shipping 
association acquaints the individual farmer with 



Local Live Stock Shipping 



107 



Fig. 12. 



COOPERATIVE LIVESTOCK 

SHIPMNO ASSOCIATIONS 

1919 




ABOUT 500 LIVE STOCK SHIPPING ASSOCIATIONS NOW OPER- 
ATE IN WISCONSIN. 

— Bulletin 314, Wisconsin Experiment Station. 

the needs of the market. In this way he soon 
learns the market grades and classes and governs 
his production accordingly. In the past, farmers 
have largely worked in the dark as to the market 
demands and were often penalized for their ef- 
forts. 



108 The Modern Farm Cooperative Movement 

Another point is that the farmer-members soon 
learn th^t it does not pay to over-feed their stock 
just before shipment. This gains them nothing 
and results in undue shrinkage and often in the 
death of individual animals. 

Still another point is that the farmers acting 
as stock shippers eliminate the great expense in- 
curred in personal solicitation for business. The 
business comes to them without this solicitation 
as each member is usually bound to ship his stock 
through the association. 

Another great advantage of the local associa- 
tion is that the farmer can ship his stock at such 
time as he is ready and it is in the best condition. 
He doesn't have to wait for a buyer to see it. 

The farmer will be educated to higher standards 
of live stock due to the fact that he will be in a 
position to notice that the better the animals he 
ships, the better the price received for them. 

These are a few of the reasons explaining the 
local cooperative live stock shipping movement 
and its growth. It is one of the strongest and 
safest of all of the local cooperative selling move- 
ments and is bound to grow and increase in favor 
and influence as time goes on. 



CHAPTER NINE 

Local Dairy Marketing 

When the farmer takes up the cooperative idea 
as a means to an end, he should not lose sight of 
the fact that he is entering business and will be 
subject to all of the problems and trials that come 
to those in business. It means that unless he can, 
through cooperation, more efficiently handle the 
particular product than it has ever been handled 
before, there is small reason for going into busi- 
ness at all. 

The Hutchinson Creamery Company, a cooper- 
ative creamery at Hutchinson, Minnesota, has 
passed through all the varying experiences of a 
farmers^ cooperative organization that has pio- 
neered the way. It was organized 27 years ago 
with a capitalization of $5,000 divided into $25 
shares. At the present time there are 90 stock- 
holders and approximately 270 patrons. 

The plan of organization is very similar to that 
found in the ordinary cooperative concern. The 
stockholders are paid a dividend of 5 per cent and 
receive no other consideration than that given the 
patrons by the management. *^We aim to pay 
very little in dividends,'' said A. Rasmussen, the 



110 The Modern Farm Cooperative Movement 

manager, ''but give the benefit to all in monthly 
returns. That is more satisfactory to all con- 
cerned. Dividends are a small part of the benefits 
secured by cooperation. 

''We have more patrons than stockholders. 
Many who are not stockholders are the real pro- 
ducers for the company. We do not deem it ad- 
visable to pay big dividends, as that would be a 
drawback to all who are not stockholders. Many 
of our patrons who are large producers Avould not 
be so loyal in aiding us in building up the company 
if they felt that all the profit they were producing 
was going into the pockets of someone else. For 
that reason, I feel that the cooperative which or- 
ganizes for the sake of dividends, or which pays a 
large dividend, is really defeating its own larger 
interests. '^ 

The Hutchinson Creamery Company manufac- 
tures the highest quality butter made. The entire 
output of the plant is shipped to Philadelphia 
where it is retailed by a chain store company. And 
right here is the most important element in the 
success of the company, in the opinion of Mr. Ras- 
mussen. 

Mr. Rasmussen is a master butter maker. He 
has taken prizes and won the highest honors at 
countless fairs and butter-making demonstrations. 
For years his butter scored highest at the Minne- 



Local Dairy Marketing 111 

sota State Fair and in the Waterloo Dairy Show 
and other competitions. ^^In starting a cream- 
ery/' said Mr. Rasmussen, ^^the very first thing of 
importance is to set your stakes for a quality 
product. Make the best there is, if you seek the 
highest profit on the market. If you turn out 
ordinary butter, you are not taking advantage of 
your fullest opportunity to make your business the 
most profitable. The range between the best and 
the poorest butters on the market at the present 
time is as much as 15 cents per pound. The 
Hutchinson Creamery Company is now paying 10 
cents per pound more for butterfat than the aver- 
age creamery in the state. The line must be 
drawn close on your producers in order to make 
quality butter-making possible, but it is highly 
important to do it. When you establish a reputa- 
tion for a superior product and are enabled to pay 
your producers a higher price for their fat, as we 
do, they soon learn the wisdom of your course and 
will cooperate with you to the fullest extent be- 
cause they know that it pays them to do so. ' ' 

Volume production on the part of the new 
creamery, or the old one for that matter, is of 
slight relative importance in comparison with 
quality. The city consumer demands a superior 
product when he comes to buy and he is willing 
to pay a premium for it to the producer who can 



112 The Modern Farm Cooperative Movement 

meet his needs. Those who are making the most 
profit from farm products of all kinds are they 
who are taking advantage of this tendency. The 
Hutchinson Creamery Company has recognized 
this point from the very beginning. It has made 
progress slowly, being content to make the very 
best product from the start and then looking to 
ways to increase volume as reputation of the 
Hutchinson butter has grown and the demand in- 
creased. In 1920, the creamery manufactured and 
sold 384,000 pounds of butter. In 1921 there was 
an increase in volume of 35 per cent over the pre- 
vious year, the volume for that year being ex- 
pected by Mr. Easmussen to exceed 500,000 
pounds. An indication of the value of turning out 
a superior product is found in the comparison of 
the average price paid by the Hutchinson Cream- 
ery Company last year for butterfat as with the 
average price received for butter manufactured 
by other creameries in Minnesota. The Hutchin- 
son concern paid an average price for butter fat of 
67 cents in 1920, while the average price received 
for manufactured butter by all the other cream- 
eries in the state was only 59 cents per pound ! 

Of course, in the long experience of the Hutch- 
inson Creamery Company it has had its hard 
knocks and its bitter experiences. There have been 
times when the future looked none too rosy; times 



Local Dairy Marketing 113 

when private competitors were making a sav- 
age drive to accomplish its annihilation through 
every measure, legitimate and illegitimate, that 
could be called into use. But through it all it has 
emerged the better for the experience, largely be- 
cause of the long-headed quality of its manage- 
ment. 

Not so very long ago the company was threat- 
ened with ruin because a competitor offered to pay 
a few cents more per pound for butter fat than the 
cooperatives felt that they could pay. As a re- 
sult, a large percentage of the patrons left the 
cooperative company and delivered their cream 
to the private concern. 

**Not only that," continued Mr. Rasmussen, 
*'but we found that it was impossible for us to in- 
crease our volume in order to hold our own be- 
cause we were unable to take care of the skimmed 
milk for the producer. We are not located in a 
hog producing section, as you are down in Iowa, 
where the skimmed milk or by-product can be util- 
ized to good advantage by the producer himself. 
We found that the farmers and the dairymen 
would refuse to add more cows unless they could 
sell us the whole milk. Our efforts to induce men 
around Hutchinson to increase their herds in or- 
der that we might increase our volume were fruit- 
less. We had to be able to increase our produc- 



114 The Modern Farm Cooperative Movement 

tioii in order to meet the competition of private 
concerns. It was a life or death proposition with 
us/' 

Mr. Basmussen set to work immediately to find 
a way to use the skimmed milk in the manufacture 
of some product that would have a sale and ready 
demand on city markets. One day he went to the 
Twin Cities — Minneapolis and St. Paul — and in 
passing through the market section of the cities 
noticed that cottage cheese was being sold by a 
few booths. That gave him an idea. He went 
back to the creamery in Hutchinson and com- 
menced to experiment with a process for the man- 
ufacture of cottage cheese right in the creamery 
building. 

One day he announced to the startled patrons 
of the creamery that he would in the future buy 
all of their milk. He offered a liberal price, much 
better than any private concern in the town could 
afford to pay, and the result was that henceforth 
he secured the undivided support of every pro- 
ducer in the vicinity. 

This work was started during the war, but he 
found a market at the Twin Cities for his cottage 
cheese and the result has been that today the 
Hutchinson Creamery Company supplies 75 per 
cent of all of the cottage cheese marketed in those 
cities. In 1920, he manufactured and sold 300,000 



Local Dairy Marketing 115 

pounds of the cottage cheese. This explains why 
it was possible to increase the volume of butter 
manufactured 35 per cent in one year. More cows 
were brought into the community because he had 
found a way to utilize the skimmed milk profitably. 

^'The important thing in a cooperative ven- 
ture/' added Mr. Rasmussen, "is the spirit of the 
organization back of you. Unless the spirit is 
good, no matter how hard a man may work, he 
cannot hope for any great amount of success. Co- 
operation should be practiced all down the line, 
and the better the spirit, the more results there are 
to be secured by everyone interested in the move- 
ment. 

"Of course, we have the type of men I call the 
* one-cent fellows,' who will rush off to the com- 
petitors as soon as they offer them one cent per 
pound more for their product than we can afford 
to pay ; and if there are enough of this type of men 
in any organization they can wreck it in short 
order. But the cooperative spirit here is good. 
The manager of any cooperative concern, how- 
ever, must keep wide awake at all times and not 
let the quality of his product go down. That is 
what wins in the face of foreign competition when 
you get to the market ; the spirit of the crowd will 
not help you there.'' 



116 The Modern Farm Cooperative Movement 

The Hutcliinson Creamery Company has suc- 
ceeded, and is today the institution it is because of 
the fact that it has rendered the utmost service to 
its patrons. When it was faced with disaster, it 
solved the problems of competition at home by 
finding a way to utilize a by-product which had 
been unprofitable and unmarketable before. It 
has built its house on the solid rock of a quality 
product, and it has never, for an instant, allowed 
that quality to sag, whatever the temptation. 

And, as a result of that business creed, it has 
made Hutchinson, Minnesota, one of the most 
prosperous communities in the whole state. It 
has enabled business in the whole community to 
go forward and it has made its own creamery the 
third largest in Minnesota, a state of large co- 
operative creamery associations. 

This detailed experience of one outstanding co- 
operative creamery will serve to give a view of 
the mission in life of local dairy marketing asso- 
ciations so far as their own immediate trade com- 
munities are concerned. But it is only in the real- 
ization of the magnitude of the movement over 
the chief dairy states that a really comprehensive 
view of the dairy marketing movement is grasped. 

According to A. J. McGuire, university exten- 
sion specialist of Minnesota, there were in Oc- 
tober, 1921, some 600 of these cooperative cream- 



Local Dairy Marketing 117 

eries in Minnesota alone. These 600 farmers' co- 
operative creameries manufactured 100 million 
pounds of butter annually, which was 75 per cent 
of all the butter produced in the state. They paid 
their patrons an average of 45 cents to 50 cents 
per pound for butter fat for the month of August, 
1921, and the lowest class cooperative creameries 
paid 35 cents. According to Mr. McGuire, the 
lowest price paid by the cooperative creameries 
was comparable to the highest price paid by non- 
cooperative creameries, or those privately owned. 

The average increase in price which the coopera- 
tive creameries enable the farmer and dairyman 
to receive for his butterfat amounts to 10 cents per 
pound, which means a yearly average of $20 to 
$25 per cow to the Minnesota producer more than 
he would receive if there were no cooperatives in 
the state. 

E. B. Heaton, director of dairy marketing for 
the American Farm Bureau Federation and sec- 
retary-treasurer of the Farmers' Dairy Market- 
ing Committee of 11, recently made a tour of East- 
ern cooperative dairy marketing associations and 
gave the following interesting review of two locals 
he visited. We quote Mr. Heaton from a recent 
news letter issued by the American Farm Bureau 
Federation : 



118 The Modern Farm Cooperative Movement 

^^We studied two locals of special interest to 
dairymen. One is the Windham County Coopera- 
tive Milk Producers, Inc., at Brattleboro, Vt., and 
the other is the Producers' Dairy Company at 
Brocton. 

^'The Windham County company was organized 
so that the farmers in that section of Vermont 
could keep the market which they had as individ- 
uals. These farmers had been selling milk to the 
city of Springfield, Mass., for many years. Theirs 
is a cooperative corporation with an authorized 
capital stock of $50,000 divided into 5,000 shares 
of par value of $10 each. No member of the as- 
sociation can hold shares of a greater par value 
than 10 per cent of the authorized capital stock, 
and no member shall be entitled to vote by proxy. 
A member has only one vote. It is provided in 
the by-laws that the directors shall annually set 
aside a reserve fund of 10 per cent of the net 
profits until the accumulated reserve equals 30 per 
cent of the paid-up capital. From the net profits 
remaining the directors shall annually set aside a 
sinking fund of 10 per cent thereof to be applied 
upon the mortgage indebtedness until such is paid 
in full. They then shall pay from the net profits 
remaining, up to and including 6 per cent of the 
net paid-up capital stock of the corporation. Any 
balance remaining shall be apportioned once each 



Local Dairy Marketing 119 

12 months, according to the apportionate value of 
the products each member has sold to the corpor- 
ation. These people have at the present time a 
plant which cost them $60,000, and with machinery 
costing an additional $25,000. Thirty thousand 
pounds of milk are taken in daily, 70 per cent of 
which is shipped as wholesale milk to Springfield 
and 30 per cent surplus is marketed as sweet 
cream. The members of this cooperative organiza- 
tion are required to take shares on the basis of 
$25 per cow of the average number of cows kept 
in the herd during a year's time. At the present 
time all but $18,000 worth of stock is paid in full. 
The average cost of overhead during the first six 
months of operation was 25 cents per hundred 
pounds. The milk is sold wholesale to a chain 
store man in Springfield, who has some 80 stores. 
Farmers are getting 7 cents per quart f. o. b. cars 
Springfield, and it costs them about one cent per 
quart to ship the milk. All members are also 
members of the New England Milk Producers' 
Association. 

**The Producers' Dairy Company at Brocton, 
Mass., is a farmers' stock company with coopera- 
tive features. They have 81 farmer patrons with 60 
holders of common stock and 60 preferred stock- 
holders. The authorized capital is $100,000 with 
$45,000 worth of common stock sold at the present 



120 The Modern Farm Cooperative Movement 

time, and $40,000 of preferred. They have an ex- 
cellent plant costing $115,000. It has a capacity 
of 15,000 quarts daily. At the present time they 
are handling 8,000 quarts. The company is re- 
tailing milk in the city of Brocton and making ice 
cream. It is retailing milk at 14 cents a quart, 
and selling ice cream at $1.45 per gallon. Any 
additional surplus is sold as sweet and sour milk. 
Last year the company did a total business of over 
$300,000. Each stockholder is allowed one share 
of stock for two 8-gallon cans of milk produced. 
Last year the company made 110 per cent on the 
common stock. The organization prorates the 
profits back to the producers according to the 
amount of milk produced. A majority of the 
members are members of the New England Milk 
Producers' Association, the big New England- 
wide organization. This local farmers' company 
is marketing its daily products in a business-like 
manner and has as a manager a real business man. 
The company is expending from $100 to $500 per 
month in paid advertising in the city of Brocton. 

^'A point of interest in connection with these 
two successful cooperative farmers' milk organi- 
zations is the fact that the manager of each of 
these organizations is a former county agent." 

Farmer-owned local dairy marketing associa- 
tions are among the oldest of the local coopjerative 



Local Dairy Marketing 121 

movements. If they are outranked in point of age 
by any of the local movements, it is by the local 
elevator movements. But aside from the ques- 
tion of age, the fact remains that they are among 
the most common and successful of the local co- 
operative movements generally. What they have 
accomplished in the chief dairy states is but an 
indication of what the cooperative movement will 
accomplish for other producers, given the same 
support, the same volume and the same quality of 
management. 



CHAPTER TEN 
Local Mills 

The most important thing in the farm coopera- 
tive movement at the present time is to keep well 
within the marketing channel. The farmer must 
build strong and to a purpose and in a closely knit 
way, if his capital investment is to be wisely used 
and his cooperative efforts are to serve the largest 
number. The farmer at the present time should 
limit his cooperative business associations to the 
marketing of farm products; he should strive to 
follow those products up to the very last step be- 
fore they change their form. There he should 
stop, as a farmer, for the time being. 

The Farmers' and Merchants' Milling Com- 
pany of Glencoe, Minnesota, is, and is not, an ex- 
ception to the above rule. In one sense of the 
term, the farmers have stepped over the reason- 
able bounds of true cooperative effort as farmers, 
and have diverted their capital and their energies 
to activities outside the well-beaten marketing- 
channels. Under the above principle, they should 
follow their wheat up to the mill door and then 
cease. 

In another sense the Glencoe milling venture is 
a splendid example of the lengths to which farm- 



Local Mills 123 

ers may ultimately go, in the cooperative move- 
ment, to render service to the community and in 
coordinating their efforts. The farmers around 
Glencoe have demonstrated their acknowledg- 
ment of the above principle by not attempting, as 
a class, to enter the milling business. They have 
entered the milling business rather as consumers 
than as farmers and wheat producers. And this 
is perfectly legitimate, even in the face of the 
seemingly paradoxical situation at Glencoe. The 
farmers do not control the mill at Glencoe as farm- 
ers. They own it in conjunction with consumers 
and merchants. It is a strictly community propo- 
sition, and the service it renders is to the whole 
community, not to any particular class. 

The history of the Glencoe flour mill is full of 
interesting situations. It is much the story of the 
old local mills which gradually ebbed out as the 
competition of the large millers in the favored 
milling sections became stronger and more influ- 
ential. Hardly a small town in the middle west 
exists that has not had its old mill, which gradu- 
ally shriveled up for lack of patronage, as the 
growing of wheat was discontinued and flour was 
shipped in from the Northwest or the West. The 
chief difference in the Glencoe mill has been that 
the farmers in the community immediately sur- 
rounding Glencoe were not content to have the 



124 The Modern Farm Cooperative Movement 

mill close its doors permanently. They felt a 
need for that mill, and they were willing to take 
hold of it along cooperative lines and preserve 
its service to the community. 

According to A. Green, manager, the Glencoe 
mill passed through the usual changes in owner- 
ship common to these old mills, and gradually 
passed from bad to worse. Some five years ago, 
the farmers who had been unusually successful in 
various forms of cooperation in Glencoe, deter- 
mined to take over the business. The '^Farmers' 
and Merchants' Milling Company '^ was organized 
along cooperative lines with $75,000 capital stock 
divided into $50 shares. These shares were sold 
to farmers and to the merchants of Glencoe. 

The plan was strictly cooperative. There was 
no desire to enter business for profit in the sense 
that profit is sought by private corporations. A 
fair rate of interest on the capital invested — 5 per 
cent — is paid and the balance of the earnings are 
placed in a sinking fund. In June, 1921, when the 
author visited the mill, after the concern had been 
in business five years as a cooperatively organized 
concern, it had 250 stockholders and patrons. 

The history of the Glencoe mill reveals that it 
was never a success until the farmers took hold of 
it. The failure to succeed was due in part, to lack 
of capital, to lack of patronage, and to lack of 



Local Mills 125 

careful management. Mr. Green was the first 
manager under the farmers' regime, but dissen- 
sion soon arose and after he had run the business 
for awhile, the trouble broke out in a row that 
threatened to disrupt the entire organization. As 
a result Mr. Green got out and the management 
was turned over to another. 

Under this management the mill lost $7,000 in 
one year. The farmers realized that something 
more than politics was necessary to successfully 
conduct as intricate a business as milling, so they 
called Mr. Green back to the management of the 
business, where he has been ever since. 

Sixty per cent of the wheat used in the manufac- 
ture of flour by the Glencoe mill is grown by farm- 
ers around Glencoe. This is the first great service 
which the mill provides for the community ; it cre- 
ates a steady year-around market for the farmers' 
wheat right at his own door, a market which gives 
him the very highest possible market price for his 
wheat, because it eliminates the various middle- 
men 's profits. The other 40 per cent of the wheat 
used is the hard red Montana wheat. This is 
purchased in Montana in carload lots and is 
shipped direct to the mill. 

Mr. Green was asked whether or not this Mon- 
tana wheat was purchased from farmers' cooper- 
ative concerns in Montana, whether or not they 



126 The Modern Farm Cooperative Movement 

were following the cooperative idea to its logical 
conclusion when they came into the market to pur- 
chase their supplies. 

^'No/' he replied, ^'we have made no effort to 
get in touch with farmers' cooperative elevators 
or shippers when we buy that w^heat. We merely 
buy where we can find the most favorable price/' 

The Glencoe mill has a capacity of 125 barrels 
of flour per day. Practically all of this flour is 
sold in Glencoe or to merchants along the railroad 
lines leading out of Glencoe. Mr. Green stated 
that the majority of it was sold in less than car- 
load lots, indicating that it goes for local consump- 
tion within the trade territory of the mill and that 
the larger advantages and service of the mill are 
not lost by the sale of its output to large individual 
buyers. 

^^The greatest trouble with the cooperative 
management or organization of business today/' 
said Mr. Green, ^'is the fact that the average mem- 
ber of such a concern does not have the true co- 
operative spirit. The stockholders seem to con- 
stantly feel that they ought to have special service 
in the deal ; that they ought to be specially favored 
over the ordinary patrons of the business. It 
makes it very embarrassing for the manager, and 
extremely hard to conduct a business along the 
proper lines where this feeling persists in assert- 



Local Mills 127 

ing itself. In a true cooperatively organized busi- 
ness, the stockholder should have no greater con- 
sideration, other than the guaranteed interest 
which he receives on the capital invested in the 
business. A cooperative business is organized 
for the benefit of the many, for the benefit of the 
patrons as well as for the stockholders. Often- 
times the patrons are contributing more than the 
stockholders to the success of the business in the 
volume they bring. And if the stockholders are 
to receive the advantage through small, special 
service or consideration, the confidence of the pa- 
trons in the institution is sure to be shaken. Stock- 
holders should be big and broad enough, and full 
of the cooperative spirit sufficiently to appreciate 
this fact. And this holds true regardless of what 
the particular business they may be trying to con- 
duct along cooperative lines." 

This point seems to be the one uppermost in the 
minds of the managers of the cooperative organ- 
izations which we have visited. It will be recalled 
that in the chapter on Local Dairy Marketing that 
Mr. A. Rasmussen, manager of the Hutchinson 
Cooperative Creamery, voiced a similar opinion, 
and stated that he felt it absolutely necessary to 
treat all, stockholders and patrons, alike in the 
proper management of a cooperative creamery. 



128 The Modern Farm Cooperative Movement 

''The mill is beneficial to the entire commu- 
nity/' continued Mr. Green. "People don't seem 
to realize that they get a dividend every time they 
come to the mill, whether they bring their wheat 
or come to buy flour, and that the patrons earn it 
as well as the stockholders. We have even had 
some stockholders who refused to cooperate with 
us, and who feed their wheat to hogs rather than 
bring it in to the mill, because we have refused to 
grant them special privileges. But it is best to 
cut them out, get them out of the organization. 
They are not true cooperators, do not have the co- 
operative spirit. We have to treat them all 
alike." 

At the time the author visited the Glencoe mill 
a new elevator of 25,000 to 30,000 bushel capacity 
was in process of construction. It is not planned 
for the storage of wheat so much as it is planned 
for general shipping purposes and for use in feed 
milling, which will make it possible for by-prod- 
ucts resulting from the milling of flour being util- 
ized to the fullest advantage. This important 
addition to the service already rendered by the 
mill was brought about largely because Mr. Green 
found that many farmers wanted mill feeds, and 
also due to the mutual desire of all to make the 
flour milling venture as successful as possible. 



Local Mills 129 

This called for the prompt and efficient utilization 
of all by-products. 

From another standpoint, it is doubtful whether 
or not the elevator is justified as a strong link in 
the local cooperative chain, for the reason that 
the farmers of Glencoe already own and operate 
an elevator just two blocks down the tracks from 
the flour mill. The erection of this new elevator 
would seem to call for a duplication of capital ex- 
penditure and effort in the same community, and 
the consequent weakening of the cooperative 
chain, that was ill-advised. 

If elevator services were necessary in connec- 
tion with the flour mill would it not have been 
the part of better business to have used the facil- 
ities of the elevator down the tracks in every way 
possible? As it now stands, the farmers seem to 
be competing with themselves in a fashion that 
good business judgment would not indicate to be 
necessary. 

The Glencoe mill, however, is a distinct success 
and one of the very few farmers' mills in the coun- 
try that has been so favored. This is due to the 
able management which it has enjoyed through the 
majority of its existence as a cooperative concern, 
and to the whole-hearted support which the ma- 
jority of the community has accorded it. It is 
but another example where a cooperative concern 



130 The Modern Farm Cooperative Movement 

lias succeeded where a private enterprise had 
demonstrated an inability to succeed under vari- 
ous managements and over a long period of years. 



CHAPTER ELEVEN 

other Local Movements 

The local cooperative movement is by no means 
confined entirely to the marketing of grain, live- 
stock or dairy products, as may be assumed by the 
average person. It is spreading with great rapid- 
ity to practically every product which springs 
from the soil or which is produced by farmers or 
ranchers. Its magnitude is staggering. It is con- 
fined to no one particular section of the country 
but extends from Maine to California and from 
Minnesota to Louisiana. 

The local movements in fruit and vegetable 
marketing are fairly well known to the country 
at large, particularly the efforts along this line 
in the Atlantic seabord states and on the Pa- 
cific Coast. Our attention will not be directed 
towards these movements, so far as detailed ex- 
amination of them is concerned, for the reason 
that we are primarily interested in the newer and 
more general movement extending over the entire 
Middle West, or in the upper Mississippi Valley. 

The farm products which are being marketed 
cooperatively at the present time, in addition to 
those already discussed, in the Middle West, in- 



132 The Modern Farm Cooperative Movement 

elude rice, potatoes, cotton, strawberries and other 
small fruits, vegetables and garden truck, tobacco, 
pop corn and many others. It will be impossible 
to consider all of these products in detail, but we 
will discuss a few of the more common ones in 
order to give an inkling to the reader of the mag- 
nitude of the movement. 

STEAWBERKIES 

'Cooperation in marketing among agricultural 
producers is often taken to be something distinctly 
new, so new in fact that it is difficult to form an 
accurate estimate of results. It is not often pos- 
sible to estimate the work and achievements of a 
farmers ' cooperative organization which has been 
in existence for a full generation and to witness 
the amazing results which it has accomplished 
through steady progress for the community. It is 
likewise very seldom, indeed, that one can consider 
the effect of such cooperative marketing upon a 
community where such cooperative effort has 
dominated the whole life of the community to the 
extent of the one we have in mind. 

Not long ago we found such a cooperative enter- 
prise at Sarcoxie, in Jasper county, down in the 
heart of the Missouri strawberry country. Straw- 
berries form the very backbone of the prosperity 
of the community. Everyone in the vicinity 
thinks, talks, acts, dreams about strawberries. 



other Local Movements 133 

One has to be in the community but a few minutes 
to discover this fact. Strawberries form the fa- 
vorite topic of discussion of those who drop into 
the banks, the grocery stores, or w^ho congregate 
on the street corners. Everywhere, in season or 
out of season, you can stop the first man you meet, 
ask him a question about strawberries and his face 
will light up and he can give you a multitude of 
facts on the subject. 

There is just one other subject which holds as 
much importance in the minds of the people of the 
community as the strawberry does, and that is co- 
operative marketing. The Sarcoxie grower is a 
firm believer in the principle of cooperation in 
marketing; in fact, the majority of them have 
been ^^ raised'' with a belief in the principle of 
cooperation in marketing. The main shipping 
association there was organized more than thirty 
years ago along the strictest lines and it has con- 
tinued to serve the needs of the growers through- 
out all the intervening years, in good years and in 
bad years. 

What has this association done for Sarcoxie f 
In the first place, it has enabled the growers to 
secure the maximum profit for their crop year 
after year. It has enabled the Sarcoxie associa- 
tion, which is an ^independent" organization, to 
secure a better price for the Sarcoxie berries 



134 The Modern Farm Cooperative Movement 

ranging from 15 cents to 25 cents per crate aver- 
age each year over what other cooperative asso- 
ciations operating over the whole Missouri fruit 
and strawberry country have been able to obtain 
for their producers. 

But, to our mind, the most important thing 
which this cooperative association has obtained 
at Sarcoxie is the fact that it has made a new de- 
velopment of the country around Sarcoxie possi- 
ble. It has fostered and made profitable the rec- 
lamation and clearing of new land each year and 
the association has expanded and grown along 
with the strawberry industry. 

Starting as an insignificant side line the associa- 
tion has made the strawberry business the chief 
aim and purpose of the territory it serves. It has 
made a large amount of money for practically 
every member, considerably more than they could 
have made from their land with any other crop. 
It has fed the town and community life-giving 
prosperity, a steady stream of foreign cash every 
season. This is reflected in an increased standard 
of living for the members and their families and 
better educational advantages and community 
privileges for everyone. 

Small fruits have long been deemed profitable 
by many farmers who had land suitable for their 
production, but the first thought that interferes 



other Local Movements 135 

with carrying the program into execution is the 
matter of pickers at the proper time to get the 
crop to market in good season. 

*^How do you handle the labor problem?'' we 
asked a member of the Sarcoxie Horticultural As- 
sociation. ^'How do you manage to secur^ enough 
pickers at the proper time to take care of the 
needs of everyone?'' 

**Well," he answered, **You have got to have 
pickers and plenty of them. At the height of the 
season we have from 6,000 to 7,000 pickers in 
town in addition to the people who live here." 
Sarcoxie has a population of slightly more than 
1,000 people. *^We are up on the edge of the 
strawberry section, which starts down in Texas. 
There are thousands of people who make it a 
business to follow the strawberry season and they 
work north with it. All we have ever had to do 
was to run advertisements in the papers in towns 
around us telling how many pickers we could ac- 
commodate and when we wanted them, and they 
would come pouring into town on the trains. Most 
of them are ordinary hoboes, but they make very 
good pickers. During the war they sent us college 
girls and boy scouts under the care of teachers 
and others. The people furnished them tents in 
which to live and they made the very best pickers 
we have ever had. " 



136 The Modern Farm Cooperative Movement 

Last year the growers paid the pickers three 
cents per quart for their work. It is interesting 
to comment here upon the method which the Sar- 
coxie growers have adopted for handling the pay- 
ment of the pickers. All the business of the asso- 
ciation is handled through the Bank of Sarcoxie. 
It requires a tremendous sum of money to finance 
the operation of the growers and the bank does 
this by a simple plan which might be adopted by 
other cooperatives in other sections of the country 
where it is necessary to do business on a cash 
basis. The Bank of Sarcoxie has issued a special 
coinage of three coins which are used in paying 
the pickers. One coin is paid for picking a quart 
of berries and is about the size of an ordinary 
five-cent piece; another which is paid for picking 
one tray of berries (one-fourth crate) is about the 
size of a twenty-five-cent piece, and another, the 
size of a dollar, is paid for picking one crate. On 
the reverse side of the coins is simply a large 
strawberry; on the obverse side one finds the 
inscription: ^^Bank of Sarcoxie. One crate'' for 
the large coin and corresponding inscriptions for 
the smaller coins. These three coins are used to 
finance the entire business of picking the crop and 
greatly facilitate the work of making change. 
They are redeemable for cash or trade at any bank 
or store in town. They make it unnecessary for 



other Local Movements 137 

any grower to use any cash at all to pay the 
pickers. 

Before the season starts the members of the 
association hold a meeting and determine the 
price which they will pay for picking that season. 
The price per crate to be paid, then becomes the 
redeemable value of these coins for that season. 
They likewise determine how many coins they will 
require, or how much money it will take to pay for 
the cost of picking the crop. The association then 
signs a note at the bank for the money thus neces- 
sary to finance the crop and the bank * * pays ^ ' the 
growers the money in the form of the coins men- 
tioned above. As soon as the growers have mar- 
keted their crop they settle with the bank. The 
bank charges no interest on the coins extant, but 
merely for the length of time the growers are util- 
izing the credit extended on the note. 

The Sarcoxie Horticultural Association has a 
membership of more than 200 growers living in 
and around Sarcoxie. It is strictly a cooperative 
enterprise. All that is necessary for a grower to 
become a member is for him to pay the member- 
ship fee of $1. The association owns a shipping 
shed along the Frisco tracks and hires the neces- 
sary help for the purpose of packing the fruit de- 
livered at the shipping shed into the cars. Very 
often extra shifts are required and men are busy 



138 The Modern Farm Cooperative Movement 

all night loading the cars, according to one of 
the members. This man stated that one day a few 
seasons ago the association shipped out 35 car- 
loads of strawberries. ^ ^ We kept a Frisco engine 
busy switching the cars one whole night, ' ' he said. 

Nineteen twenty-one, which was a poor season 
for strawberries, due to late frosts, the Sarcoxie 
association shipped a total of 80 cars of strawber- 
ries. This was about one-third of the average 
crop produced in the vicinity. 

The average value of the land around Sarcoxie 
upon which these strawberries are produced was 
placed at around $75 per acre by disinterested 
parties, although it is hard to find people in Sar- 
coxie who are not interested in the strawberry 
business. A. B. Cox, the Frisco station agent, has 
close to 40 acres of strawberries ^'on the side' ' and 
practically every business man in town has a few 
acres of strawberries or is in partnership with a 
grower. The whole community is tied up to the 
crop in an amazing way, demonstrating the su- 
preme faith which everyone has in the chief enter- 
prise of the community. 

**The average yield of strawberries around Sar- 
coxie in a good season is from 150 to 200 crates per 
acre,'^ another grower told us. ^^Much depends, 
of course, upon the attention which is given the 
crop and upon the season. Last spring (1921) 



other Local Movements 139 

the late frost interfered with the crop and we pro- 
duced only an average of about one-third of a 
crop. During 1921, however, the association re- 
ceived an average of $4.15 per crate for the berries 
shipped. During the war we received as high as 
$6 per crate. ' ^ 

It must be manifest to everyone who has ever 
had a patch of strawberries in a corner of the 
garden that a tremendous amount of labor is in- 
volved in producing strawberries. The labor cost 
for a large plantation then becomes an enormous 
problem for the large-scale grower. ^*What,'' we 
asked a Sarcoxie grower, ^4s the average labor 
cost for an acre of strawberries per year?" 

**That," he answered, smiling, ^4s a question I 
was discussing with Mr. Gaugler, manager of our 
association, the other night. We finally came to 
the conclusion that it costs an average of $100 per 
year per acre to produce the crop, irrespective of 
crating and handling after picking. It merely 
covers the cost of producing the crop from the 
time of setting out the plants through the picking 
of the berries. It runs high because strawberries 
demand a lot of attention." 

During the season the Sarcoxie association em- 
ploys its own sales agent, who contracts for the 
entire crop and then sells it to the best advantage 
wherever he may. Most of the crop produced at 



140 The Modern Farm Cooperative Movement 

Sarcoxie is sold within the state of Missouri, but it 
all depends upon market conditions. 

The Sarcoxie growers are firm believers in 
mulching their berries and this is done in the fall 
about the time of the first hard, severe weather. 
It costs considerably more to do this, but they are 
confident that it pays in the long run. This is only 
one of the many points which their association has 
developed along an educational line, through the 
policy of cooperating in experience and methods 
of culture, as well as in methods of packing, crat- 
ing and marketing. 

The main consideration has been the success of 
the Sarcoxie growers in their cooperative selling. 
Each member is given a number with which he is 
compelled to label every crate that he delivers to 
the association for shipment. If there are any 
losses, that number is reported back to the asso- 
ciation by the buyer and the loss charged against 
the grower represented by the number. Losses 
are, however, an infrequent occurrence. 

All amounts due the grower are likewise com- 
puted through the use of these numbers, records 
of which are kept by the secretary of the associa- 
tion. Everything possible has been done to sim- 
plify records and the work of financing operations. 
The coin idea for paying pickers is an example of 
one of the things done along this line. 



other Local Movements 141 

EGG MARKETING ASSOCIATIONS 

There are few communities in the Middle West 
where poultry farming has been developed to such 
an extent that local egg marketing associations 
can be maintained, as separate businesses. But 
there is hardly a community where the cooperative 
idea has been developed to any extent that does 
not boast of an egg marketing association affili- 
ated with some of the other cooperative concerns. 
Usually it will be found as a side-line in the local 
creamery; oftentimes it is managed by the local 
cooperative stores or elevators. 

But there are thousands of private egg dealers 
and packers in small towns all over the Middle 
West who are enabled to earn a living from the 
volume of eggs and poultry products produced by 
the farmers in their community. If these indi- 
viduals can survive, it is reasonable to state that 
cooperative egg marketing associations could be 
profitably organized in many communities where 
they are now unknown. 

One of the surest advantages of the local egg 
marketing association is the better price which 
it obtains for market eggs for its patrons, and for 
the marked increase in quality which it immedi- 
ately fosters among its membership due to the 
self-education it makes possible as soon as the pa- 
trons have an opportunity to find out what the 



142 The Modern Farm Cooperative Movement 

market grades are, what the market pays a pre- 
mium for, and how to obtain it. The private deal- 
ers have never taken any considerable pains to im- 
part this knowledge to their patrons because they 
could buy eggs at a general price level, re-grade 
them and earn the additional premium on the 
better grades themselves. 

But progress is being made along this line. 
Notable among the local ^gg marketing associa- 
tions over the country is the one operated in con- 
nection with the cooperative creamery at Glencoe, 
Minnesota; the one operated by the Carleton 
County Creamery at Barnum, Minnesota, and the 
Orange Township Cooperative Marketing Asso- 
ciation of Black Hawk County, Iowa. 

The latter association shows what can be accom- 
plished right at home through the power of or- 
ganized effort. The association grew out of a 
mutual understanding between a Waterloo grocer 
by the name of Sinnard, and 46 farmers who live 
near Waterloo, Iowa. Mr. Sinnard, on his part, 
was anxious to eliminate the huge egg losses which 
every grocer suffers; the farmers, on their part, 
were anxious to receive the better price for their 
eggs. 

The plan Mr. Sinnard proposed was very sim- 
ple. He proposed that each farmer keep only 
pure-bred stock of a recognized breed. It made 



other Local Movements 143 

no difference to him whether the hens laid white 
shelled eggs or brown, so long as each farmer 
kept only one kind. 

The hens were to be rigidly culled each season, 
so that only the good layers would be kept through 
the winter. Sinnard felt that good producers in 
the hen house meant better satisfied farmers and 
more eggs for him to sell. The hens were to be 
fed balanced rations and were to be housed under 
sanitary conditions in a certain type house pro- 
posed by Sinnard. All eggs were to be marketed 
at least once each week in summer, and at least 
once every two weeks in winter. They were to be 
packed in uniform cartons holding one dozen each 
and were to be sealed at the farm. Upon delivery 
at his store Sinnard agreed to pay four cents cash 
above market price for them. 

Forty-six farmers living near Waterloo signed 
an agreement with Sinnard to abide by these rules. 
And Sinnard is unable to supply the demand for 
eggs, even though he takes the entire production 
of each of these farmers. 

As an indication of the number of eggs he is 
buying, he showed me the ledger entries for Cal 
Peck, one of the members of the association, whom 
Mr. Sinnard stated to be only an average pro- 
ducer. The year previous, Mr. Peck had sold Mr. 
Sinnard an average of 140 dozen eggs per month 



144 The Modern Farm Cooperative Movement 

throughout the year. This indicates that the 
Waterloo grocer handled an average of something 
like 77,280 dozen eggs that year, and his volume 
is constantly increasing as the farmers increase 
and add to their flocks of hens. 

^*It is only a plan to cooperate with the pro- 
ducer, ' ' Mr. Sinnard said. ^ ^ By getting our heads 
together we both saved and made money. The 
farmers appreciate that when they took slip-shod 
care of their eggs that the grocer lost money and 
they got a lower price for their eggs. Getting 
a better understanding between ourselves was 
all that was necessary to solve the riddle. ' ' 

The Carleton County Creamery Company at 
Barnum, Minnesota, illustrates the practical ap- 
plication of many cooperative principles to the 
marketing of eggs. The company is not cooper- 
atively owned, but every feature of its success is 
grounded in cooperative action on the part of the 
producers and Mr. H. C. Hanson, the owner. Mr. 
Hanson is the man who first had the vision of 
* * cows and chickens ' ^ as a solution of the cut-over 
country problem when the lumbering business 
gave out. He constantly advocated cows and 
poultry, particularly the latter, until he became 
the joke of the town. But gradually his efforts 
began to bear fruit. 



other Local Movements 145 

Hugo Anderson, a lumberjack, came back to 
Barnum, his old home, and went into the poultry 
business on a large scale — and finally succeeded! 
Today he is the ^^king^^ of the Barnum commu- 
nity, a poultry center that ranks next to Petaluma, 
California, in the number of eggs produced annu- 
ally in one community in this country. 

The chief feature of the Barnum success is 
found in the measures taken to secure uniformity 
in the eggs marketed, and the fact that every egg 
shipped through the Carleton Creamery is packed 
in cartons containing the Barnum egg trade name. 
Each producer is supplied with a number which 
must be stamped upon each egg. 

The carton contains this inscription: ^* Guaran- 
teed fresh eggs put up for Carleton County 
Creamery Company, Barnum, Minnesota.'' And 
this is the guarantee : ^ ^ Note. Eggs in this pack- 
age, if they have our trade mark, are guaranteed 
to be strictly fresh, clean and full-size, and if ever 
found otherwise we wish you would do us the 
favor to report it, giving the number found on the 
eggs. Signed, Carleton County Creamery Com- 
pany. ' ' 

That it pays to market eggs under one trade 
name was forcibly demonstrated to the author by 
Mr. Hanson when the former visited Barnum. 
Mr. Hanson went into a back room and came back 

10 



146 The Modern Farm Cooperative Movement 

with a sheet of wrapping paper which he proudly 
displayed. 

^'I am keeping this as a sort of a souvenir/' he 
said, ^^and I show it to the boys when they come, 
in and I tell them how proud they ought to be of 
what they are doing.'' 

On this piece of wrapping paper, was the follow- 
ing, written in pencil scrawl; ^'Barnum eggs, 90 
cents. Wisconsin eggs, 63 cents." 

*'The paper came back to us in an empty egg 
case which Avas returned last week," smiled Mr. 
Hanson. *^It is evident that the grocer made up 
this price, and that the piece of paper fell into the 
egg case by mistake. At any rate, it gives us a 
line on what our eggs are retailing for in compar- 
ison with other farm eggs. The week this ship- 
ment was made, I paid my customers 68 cents a 
dozen for their eggs, or five cents per dozen more 
than the farm eggs of Wisconsin were bringing 
at retail in Duluth ! Which is ample proof in itself 
that it pays to produce a superior product and 
then pack your eggs in a distinctive carton, and 
market them in unison under the same trade 
name." 

In 1919, the Carleton County Creamery Com- 
pany paid out over $60,000 for eggs to the farmers 
and poultrymen around Barnum, and it did not 
handle all of the eggs shipped because one or two 



Other Local Movements 147 

of the largest producers shipped over their own 
farm names. In 1920, the Glencoe creamery 
shipped over $85,000 worth of eggs, giving a fair 
example of what small communities may do with a 
comparatively small ^ ' side-line ' ^ so far as cooper- 
ative ventures are concerned. 

POTATO MAKKETING 

Potatoes are one of the many specialized farm 
crops which have been organized into a *^ com- 
modity group '^ through cooperative organiza- 
tions, both local and federated, for the more eco- 
nomical marketing possible. The two outstanding 
states in the potato marketing movement in the 
Middle West are Michigan and Minnesota. In 
Michigan, the Michigan Potato Growers* Ex- 
change is the state-wide federation of local potato 
marketing associations, and the Minnesota Potato 
Exchange stands in a similar relation to the local 
potato marketing associations in that state. 

The growth of the cooperative potato market- 
ing movement in Minnesota dates back to 1908 
when the first association was organized. The 
movement made slight headway until 1919 when 
28 associations were organized, following two dis- 
astrous years in the potato business. The plan of 
operation had not been worked out successfully 
when these associations were launched and they 
were engaged in the doubtful pursuit of experi- 



148 The Modern Farm Cooperative Movement 

menting as to the best business plan when, in 
January, 1920, the Minnesota Potato Exchange 
was organized, frankly patterned after the Mich- 
igan Potato Growers' Exchange, and for the 
avowed purpose of standardizing the business 
plan for all of the associations, in the hope that 
such standardization would result in success. 
While it is too early to state definitely whether or 
not this hope will be realized, some real substan- 
tial progress has been and is being made, as will 
be noted in the chapter devoted to the Minnesota 
Potato Exchange later in this book. 

By the close of 1920, there were 122 local asso- 
ciations in Minnesota scattered through the cen- 
tral and northern portions of the state, as revealed 
in the accompanying map. During 1921 a number 
of associations were organized and close to 100 of 
them were affiliated with the Minnesota Potato 
Exchange. 

Of the 1920 crop, 22.6 per cent was handled co- 
operatively by the various associations in the state 
active that year. We quote from Minnesota Bul- 
letin 195, ^^ Local Cooperative Potato Marketing 
in Minnesota": ^^The 22.6 per cent of the 1920 
crop handled cooperatively is to be compared with 
the 38.9 per cent of the Minnesota grain crop 
handled by 390 cooperative elevators, with about 
65 per cent of the live stock shipped to South St. 



other Local Movements 149 

Paul by 650 live stock shipping associations, and 
with the 63.8 per cent of the butter made by 622 
cooperative creameries. Obviously, if the present 
cooperative potato-marketing methods prove ade- 
quate, or if adequate methods are ever developed, 
the cooperative movement is bound still further to 
expand in this field. ' ^ 

A more extended view of cooperative potato 
marketing is contained in Chapter XV on ^^The 
Minnesota Potato Exchange." 



PART III 

THE FEDERATION MOVEMENT 



CHAPTER TWELVE 

The Minnesota Idea 

Today Minnesota stands at the very forefront 
of the cooperative movement in the United States. 
There are more than 3,000 local cooperative asso- 
ciations in the state which are farmer-owned and 
farmer-controlled. Of this number, more than 
2,000 are strict business associations, aiding the 
farmer in the marketing of his products or in the 
buying of supplies that are necessary in carrying 
on his work. 

Iowa stands very close to Minnesota in the 
number of associations organized and according 
to statistics issued by the United States Depart- 
ment of Agriculture in 1919, ranked second, but 
in many respects Minnesota is far in the lead. 
This is due to the fact that she has been in a posi- 
tion to coordinate the work of her local shipping 
associations into strong groups, to avail herself 
of more extended experience in various phases of 
the cooperative movement and to plug up the 
weak spots, and to take the second step in co- 
operation; namely, the establishment of terminal 
marketing agencies and centralized sales forces. 



154 The Modern Farm Cooperative Movement 

Hon. Hugh J. Hughes, commissioner of mar- 
kets of Minnesota, and a cooperator of national 
repute, has had a great deal to do with the present 
movement in Minnesota. Mr. Hughes has been 
quick to sense the dangers of the cooperative 
movement, as well as the dangers which beset it, 
and he has performed the greatest possible service 
to the movement in pointing out these dangers, 
particularly the weak spots, and in lending his 
influence toward welding the cooperative chain in 
Minnesota into a stronger weapon to serve the 
farmers. 

'^The tendency in Minnesota," said Mr. Hughes, 
*4s to form food groups among the cooperatives. 
Speaking locally, that means that we are coordi- 
nating our local associations in Minnesota into five 
major commodity groups : live stock, grain, wool, 
creameries and potatoes. "We have already per- 
fected the group in the case of potatoes. This was 
done in January, 1920, when the Minnesota Potato 
Exchange was organized by 100 local potato ship- 
ping associations. The exchange acts as a central 
selling agency for all of these local associations 
selling their entire output and avoiding duplica- 
tion of effort and competition between the various 
associations when they come to market. The crop 
is handled in an orderly manner at a minimum of 
expense and effort and the Exchange has been 



The Minnesota Idea 155 

most successful during its first year of business, 
despite the unfavorable season and conditions ob- 
taining last year. ' ' 

Since our discussion with Mr. Hughes the live 
stock group has also been perfected in the Central 
Cooperative Live Stock Commission operating at 
South St. Paul stockyards and which, during the 
first six months of its existence saved the shippers 
$40,000 in commissions which it turned back to 
them. 

The creamery group, which represents the old- 
est commodity group in the state, is in process of 
organization. The creamery contracts between 
the local creameries and the state exchange, ac- 
cording to Mr. Hughes, will follow closely the Cali- 
fornia Fruit Growers' Association contracts, 
which have proved so successful on the Pacific 
Coast, which means that it will offer a complete 
commodity service to members. 

The grain movement will largely depend upon 
the United States Grain Growers, Inc., and no 
plans for a state organization have been formu- 
lated. And unless the national grain movement 
fails to achieve the result expected, no such move- 
ment is likely to result in Minnesota. No attempt 
is being made at the present time to form a central 
wool marketing agency for the reason that Minne- 
sota does not produce sufficient wool to insure sue- 



156 The Modern Farm Cooperative Movement 

cess, less than 500,000 pounds being the normal 
production. 

' ' The time has largely passed for the organiza- 
tion of local cooperative associations in these 
groups in Minnesota," added Mr. Hughes. ^^We 
feel that if the cooperative movement is to be 
made as strong as it can be and should be, that the 
effort just now should be directed along the line 
of perfecting the state and national movements. 
Such locals as are organized should be started 
merely as incidental to the state or national move- 
ment, and only in such instances where they can 
be distinct assets in making the state or national 
movements stronger. There will be nothing 
gained, in the long run, in the organization of vast 
numbers of weak locals in communities not in a 
position to properly support them. It would be 
better for these communities to centralize their 
efforts into one strong local, both from the stand- 
point of individual success and success for the 
major movement. ' ' 

Mr. Hughes is very enthusiastic in his outlook 
for the future success of the cooperative move- 
ment. * ^ The time is coming within the next three 
years, when any farmer in Minnesota can sell 
anything he produces through his own cooperative 
association. When that time comes the first step 
in the cooperative movement will be completed. 



The Minnesota Idea 157 

^ ' The next step, as I see it, will be the organiza- 
tion, on the part of consumers, of stores and ware- 
houses for the purpose of cutting out such addi- 
tional unnecessary expense in the handling of 
food products as may be possible. I expect to see 
the cooperative movement developed in the United 
States to a point, at least, comparable with its 
development in the British Isles where the con- 
sumers own their own stores, warehouses and 
manufacturing plants. 

*'The farmer should follow his product, in the 
processes of marketing, up to the very last step 
before it changes its form. Beyond that point he 
should not go, as a farmer. As a member of the 
consumer class, he might properly participate in 
the formation of cooperative mills, stores and 
wholesale houses, but at the present time I do not 
consider that he is in a position, either financially 
or as a matter of good business, to follow his 
products beyond that point, if he gets into the 
manufacturing end of the game, he must, of ne- 
cessity, become banker for the consumers, and I 
consider it dangerous to the success of the strict 
farmers^ cooperative enterprises to encourage 
anything else at the present time. That phase of 
the problem properly belongs to the consumer 
class. 



158 The Modern Farm Cooperative Movement 

*^ Consider the Twin Cities for a moment. 
There are at the present time 3,500 stores han- 
dling food products in the Twin Cities, big, small 
and puny. This is an average of one store for 
every 200 people — one store for every 40 wage 
earners. Think of the tremendous waste in over- 
head and of the tremendous cost which the con- 
sumers must pay in increased price for their food 
products ! There is no economic reason w^hy such 
a wastage should be tolerated, and I do not feel 
that the day is far distant when the consumers 
will take up the cooperative idea as their only 
form of economic salvation. When that time 
comes, then we shall have, for the first hour in 
our economic history, an economical and efficient 
system of distribution of food products. 

**Our problem in Minnesota is to find a market 
for our products, for we produce four times as 
much as we consume. We have to find a market 
for this surplus. Our producing centers in this 
country are now farther away from our markets 
than New Zealand or South America are from 
their markets (Western Europe). The coopera- 
tive idea has solved only one of the problems in- 
cidental to the marketing of our products, but it 
cannot succeed in the face of the present transpor- 
tation rates. 



The Minnesota Idea 159 

^^We must open the Mississippi and St. Law- 
rence rivers ; we must bring out here to the Middle 
West the consumers and the manufacturers, so 
that they will be closer to the source of produc- 
tion. All these are things that can come if the 
farmers and the consumers join hands in working 
out the cooperative idea to its logical and ultimate 
aim. 

*^I see in the cooperative movement, judging 
from our experience here in Minnesota, an oppor- 
tunity to bring town and country together. The 
interest of the two is the same and they must 
come together. The back-to-the-farm movement 
is absurd because the farmers are producing at a 
loss right now. Do you know that we in the Mid- 
dle West produce six times as much as middle 
Europe and three times as much as the British 
farmer and measurably more than the New Eng- 
land farmer?" 

When asked whether he thought the cooperative 
movement should, in view of the Minnesota expe- 
rience, be confined to state organizations, Mr. 
Hughes stated: **The movement should not be 
organized on strict state lines. You might then 
have the various states competing with each other 
when they came to market with their products. It 
would be wise, whenever possible, to tie up in a 
national movement. Wisconsin and Minnesota 



160 The Modern Farm Cooperative Movement 

cheese factories are now cooperating in their ship- 
ments. North Dakota is linked up with our potato 
movement. Of course, there are some products 
which cannot be tied up in a national movement 
and potatoes happen to be one of them.'^ 

The market for potatoes is regional, being 
largely within the region or close to it, where the 
potatoes are produced. With the single exception 
of the exchange of seed potatoes, there is no 
movement of potatoes from one potato region to 
another. 

^' There has been altogether too much of this 
^milk and water' stuff concerning cooperation, '^ 
continued Mr. Hughes. ^'Some day we shall all 
get together and solve this marketing problem, 
but we must not paint the skies too rosy a hue. 
The farmer has been cursed by the professional 
promoter. The farmer has organized in commu- 
nities where he had no business trying to organize. 
They lack the volume, the spirit or the ability to 
cooperate. But where the farmer has the capacity 
and the proper spirit he can cooperate success- 
fully. 

*^The effort back of the whole movement is 
simply to turn the tables on the buyer so that he 
must bid up to the full market value of the prod- 
ucts produced by the farmer. And if the farmers 
will stand behind the cooperative movement with 



The Minnesota Idea 161 

the true cooperative spirit and the proper outlook 
upon the movement, they can accomplish this very 
purpose.^' 



11 



CHAPTER THIRTEEN 

The Equity Cooperative Exchange 

One of the pioneers in the federation movement 
as applied to the larger farm cooperative move- 
ment was the Equity Cooperative Exchange, 
which had its inception in North Dakota in 1908, 
when the farmers of that state became dissatisfied 
with the price they were paid for their wheat at 
their chief terminal market, Minneapolis. They 
came to the conclusion, as a result of the experi- 
ence suffered that year, that the local cooperative 
elevator was not enough in the direction of coop- 
eration, to secure any substantial protection for 
themselves against the abuses from which they 
suffered when they came into the markets with 
their products. 

The local cooperative elevator was but one step 
in the right direction for by it they merely elimi- 
nated one middleman, the local grain dealer. 
When they came to ship their grain to the ter- 
minal markets they found that they were still han- 
dicapped, and actually were suffering more from 
the abuses of their adversaries at these terminal 
markets than they tad ever suffered at the hands 
of their local adversaries. 



The Equity Cooperative Exchange 163 

They felt that they could establish their own 
terminal marketing agencies themselves and 
thereby secure a fair price for their products, 
just as they had already demonstrated to be pos- 
sible locally. Accordingly, the fight was started 
in 1908 and it was a bitter struggle for many 
years. Every party at interest, every power 
which could be brought to play at the terminal 
markets where they sought to do business, was 
brought to bear upon them. It should be kept in 
mind by the reader that this was in the days before 
any cooperative laws had been passed in the sense 
they are now known, and before any regulatory 
legislation had been adopted by Congress pre- 
venting discrimination against cooperatively 
owned and controlled business associations. 

But after eight years of the most terrific kind of 
opposition and struggle, opposition from without 
and struggle from within the organization, the 
Equity Cooperative Exchange was on its feet with 
a paid-up capital of more than $1,560,000, owning 
80 country elevators and a large terminal elevator 
at St. Paul with a capacity of 550,000 bushels of 
grain. 

According to E. G. Horst, the Equity Coopera- 
tive Exchange carried on as follows: ^'Having 
learned the value of cooperation in the marketing 
of grain withoul; the intervention of a host of mid- 



164 The Modern Farm Cooperative Movement 

dlemen and speculators, farmer members of the 
Equity Cooperative Exchange placed faith in the 
ability of their organization to serve them in the 
live stock trade as well. They saw no good reason 
why they could not sell their live stock through 
similar channels by establishing their own selling 
agency on the terminal market. Consequently 
plans were made, an organization perfected with 
an office, a sales force and an allotment of pens at 
the South St. Paul stockyards were secured. Oc- 
tober 1, 1916, marked the first business day of the 
organization on that market, and during the first 
month 107 cars of live stock were received, and 
during the second, November, the number was 
increased to 141. 

^* Opposition was met, as was expected, from 
the commission men and speculators already 
established fFere. Drastic rules were drawn up 
by the Live Stock Exchange and heavy penalties 
were imposed on any of its members who dealt in 
any way whatsoever with the new farmer com- 
pany. They were determined to smash the coop- 
erative movement in its infancy, but the loyalty 
and determination of its members formed a bul- 
wark that could not be broken down. The excel- 
lent service given in the sale of fat and stocker 
and feeder live stock, and, in the case of stockers 
and feeders especially, the savings made in only 



The Equity Cooperative Exchange 165 

the one handling in the route from the producer 
to the farmer buyer, proved to its members and 
to many others that cooperative marketing on the 
terminal market was possible as well as profitable. 

^ ' In the brief period of its existence the Equity 
Cooperative Exchange grew from the smallest to 
the next largest commission firm on the South St. 
Paul market. At the present rate of growth there 
is no question that this farmers' selling organiza- 
tion will be the leading firm at that point by the 
end of the current year (1921).''* 

During June, 1921, the author visited the Equity 
Cooperative Exchange Live Stock Commission at 
South St. Paul and learned at first hand from Mr. 
F. B. Wood, managing director, and Mr. Fred Os- 
borne, then resident manager, the story of the 
early struggle of the Equity which is claimed by 
many people to have been the first cooperative live 
stock commission operating at a terminal market' 
in this country. 

^ ^ Our live stock commission is organized for the 
purpose of saving the speculator's profit," said 
Mr. Wood. **Take an experience which the Hon. 
XJ. L. Burdick, formerly president of the North 
Dakota Farm Bureau Federation and now con- 
nected with the United States Grain Growers, Inc., 
at Chicago. Mr. Burdick shipped 130 steers to 



* E. G. Horst, Dearborn Independent, Sept. 24, 1921. 



166 The Modern Farm Cooperative Movement 

the South St. Paul yards where he was paid $6.75 
per hundred for them. The speculator to whom 
he sold the steers resold them within a few hours 
to an Iowa farmer — they were feeder cattle — for 
$8 per hundred. The difference amounted to more 
than $2,000 cash! 

**If Mr. Burdick had shipped his steers to the 
Equity Cooperative Live Stock Commission he 
would have received $1,000 more for them than he 
did and the Iowa farmer, on the other hand, would 
have saved $1,000 on the cost. But the Burdick 
case is not the only one where such an organiza- 
tion as ours can serve the farmer who has live 
stock to market. Take the case of George Mcln- 
tyre of Castleton, North Dakota. Mr. Mclntyre 
shipped two carloads of cattle to the yards here 
and was bid only six cents on them. The next day 
we sold his cattle for 6.85 cents, which amounted 
to more than $400 extra return on the two cars of 
cattle!'' 

During 1921 the business of the Equity commis- 
sion increased 40 per cent while the entire busi- 
ness of the yards for the same period decreased 
15 per cent. And this increase has been gradual 
from year to year. The Equity Cooperative Ex- 
change Live Stock Commission is proof of the fact 
that the growth of a cooperative organization, 
whatever its purpose, is slow and cumulative. No 



The Equity Cooperative Exchange 167 

sane business man would want it otherwise. If 
in charge of trained men in tlie business, who are 
above reproach personally, there is no reason why 
the farmer cannot place such an organization any- 
where with entire confidence as to the future. 

The plan of organization of the Equity Cooper- 
ative Exchange is very simple. It was originally 
capitalized for $1,000,000 but this was raised to 
$9,000,000 at the annual meeting in January, 1920. 
The shares were divided into par value of $50 
each, but these are now selling at $60, or $10 above 
par, due to the surplus and equipment which has 
been accumulated. Dividends are payable at the 
rate of 8 per cent per annum on the capital stock, 
and all profits are paid out in a patronage divi- 
dend to the patrons on the basis of the business 
furnished the Exchange during the year. No one 
member may hold more than 20 shares of capital 
stock, according to the articles of incorporation 
and no member may have more than one vote 
regardless of the number of shares owned. 

Up to July 31, 1919, the Equity Cooperative 
Exchange had paid in dividends $64.00 for every 
$100 invested in capital stock at the time of the 
organization of the Exchange. This had nothing 
to do with the amount of patronage dividends paid 
out, but referred only to the 8 per cent dividends 
paid on the stock. These dividends are cumula- 



168 The Modern Farm Cooperative Movement 

tive and the payment made in the year ending 
July 31, 1919, amounted to $38,883.26. 

On the grain market the Equity Cooperative 
Exchange acts as any other commission firm 
would in transacting its business. It does not 
belong to the Chamber of Commerce, but is 
affiliated with the St. Paul Grain Exchange, an 
association of grain dealers and commission men 
in St. Paul organized for the purpose of establish- 
ing and maintaining an open market in that city. 
This Grain Exchange places no restrictions 
against dealing with cooperative companies and 
maintains no combinations in regard to prices, but 
stands for an open market. 

The 550,000 bushel terminal elevator which the 
Equity Cooperative Exchange owns at St. Paul is 
fully equipped to render complete selling service 
to the grain shipper, is of fireproof construction, 
equipped with two sets of scales, cleaning machin- 
ery, 54 separate bins and a loading in-and-out 
capacity of 8,000 bushels per hour, and its chain 
of line elevators in the grain producing centers 
has an additional storage capacity of 2,000,000 
bushels. It also has elevator facilities at Supe- 
rior, Wisconsin. 

Taken as a whole, it is one of the pioneer move- 
ments in the cooperative tendency among pro- 
ducers and farmers which has splendid promise. 



The Equity Cooperative Exchange 169 

Its struggles in its earlier days were terrific but it 
managed to pull through because there were suffi- 
cient loyal members in its ranks to stand by their 
guns. Perhaps they were driven to exhibit this 
fierce loj^alty by the very character of the opposi- 
tion. The Equity has many enemies, even among 
profess^ed friends of the cooperative movement, 
but so far it has continued to function in spite of 
this opposition. 



CHAPTER FOURTEEN 

The Minnesota Potato Exchange 

The potato, with the single exception of wheat, 
is the most important crop for human consump- 
tion taken from the soil. The per capita consump- 
tion of potatoes year in and year out is greater 
than for any other crop, except wheat. We con- 
sume on our tables one million bushels of potatoes 
every day in the year, and in comparatively ' ' lean 
years.'' This amounts to 1,429 full carloads on 
the present basis of 700 bushels to the carload. 

In spite of the consistent and constant demand 
for potatoes, there is no article of food which we 
produce which indulges in the wide fluctuations in 
price from season to season that potatoes do. In 
1919 at the peak of the season, they achieved the 
unheard of price of seven dollars per bushel and 
within six months had fallen to a little more than 
a dollar a bushel. One year we paid nine dollars 
for seed and tbe next year we paid eighty cents 
per bushel for better seed. And so it has gone on 
throughout the years. 

Well might the question be raised as to why all 
this erratic fluctuation in price by the lowly spud? 
One year the grower makes a good profit and the 



The Minnesota Potato Exchange 171 

next year it is all wiped out. Some years the crop 
is not dug, as in the fall of 1919 in many sections, 
because the price will not bring enough to pay for 
the labor of digging. Yet the world needs pota- 
toes and needs them badly. 

The trouble lies in just two things: A variation 
in production, haphazard marketing and specula- 
tion. The spud has ever been the darling of the 
speculator. As many fortunes have been made 
and lost in speculation on potatoes as on almost 
any other food crop. The speculators merely take 
advantage of the weakness of our present market- 
ing system, and the plan they operate under is ex- 
tremely simple. The grower is privileged to use 
it to his own advantage, just as the Minnesota 
growers are doing this year for the first time in 
history. 

But before we consider that proposition, it is 
well to get a few spud figures in hand. In 1917, 
an average war period potato year, our total pro- 
duction amounted to 442,108,000 bushels, and in 
1912 we produced an excessive crop for pre-war 
times which amounted to 420,747,000 bushels. The 
effect of this crop and the resulting low prices 
are noticed in the production for the following 
year, 1913, when the yield amounted to only 331,- 
525,000 bushels. In 1920 the production amounted 
to 414,986,000 bushels, following the lean year of 



172 The Modern Farm Cooperative Movement 

1919, when the production amounted to only 357,- 
901,000 bushels. The latter year was when the 
price did not pay for the digging and millions of 
bushels in the potato section were not dug. It was 
not a poor season, but it served to give the specu- 
lators a hand, just the same. 

The conclusion to be drawn from these figures, 
running as they do over a period of years is that 
the per capita consumption of potatoes runs from 
31/4 bushels to 4% bushels per year, roughly 
speaking. The wide fluctuation in price is caused 
by the presence or absence of that vital li/4 
bushels per capita per year. We consume prac- 
tically every bushel of potatoes we produce, so 
the exportation of a portion of the crop has little 
to do with the case. In 1920 we exported only a 
little over $8,000,000 worth of potatoes which 
would run about 10,000,000 bushels at the prevail- 
ing prices then, but we import potatoes to take the 
place of those we sell, so the score is about even 
there. 

The next conclusion that is forced upon one is 
the fact that the wide fluctuation in price, as 
shown in Fig. 13, is all out of proportion to 
the fluctuation in production. The production 
might be more nearly regulated by the growers, 
but since sane production, which means produc- 
tion at a profit, is the only sort that pays today, 



The Minnesota Potato Exchange 

Fig. 13 



173 




LOCATION OF POTATO MARKETING ASSOCIATIONS. 

— University of Minnesota Bulletin No. 195. 



174 The Modern Farm Cooperative Movement 

the first step is to retain control of the available 
supply each year so that it cannot fall into the 
hands of the professional speculators. And when 
this is done, when orderly marketing is an accom- 
plished fact and the wide spread in the price paid 
the grower and the price paid the consumer is re- 
duced, insuring a fair profit to the grower, then 
the question of a more uniform production on the 
part of the grower will largely take care of itself. 
Men are encouraged to move in the direction ot 
profit, of steady profit, and one of the reasons why 
we have had a wide fluctuation in production in 
the past has been due to the fact that men got 
tired of guessing what the market was going to do. 
They had burned their fingers too often in the 
past. 

The Minnesota potato growers have already 
taken steps to stop the market antics of the spud. 
They have had their local shipping associations, 
as was mentioned briefly in a preceding chapter, 
for several years but these were not in a position 
to cope with the real situation, any more than a 
local grain elevator is in a position to cope with 
the interests that determine grain prices, because 
they did not retain control of the market supply 
long enough; they did not guide the crop direct 
to the consumer. Hence, the potato continued to 



The Minnesota Potato Exchange 175 

pursue its hectic course up and down the market 
chart. 

It is significant to note that the very first com- 
modity group formed by the Minnesota cooper- 
ators under their plan of organizing into five im- 
portant groups, was the potato group, known as 
the ^* Minnesota Potato Exchange.'* This ex- 
change is the marketing agency for the local ship- 
ping associations and has sole control of this 
phase of the work. Every bushel of the potatoes 
grown by the grower members of the exchange is 
marketed through this agency and through none 
other. 

Last year the Minnesota Potato Exchange had 
a membership of 98 local shipping associations; 
the number is constantly increasing and will 
doubtless number 150 associations before long. 
The exchange takes orders for the potatoes in car- 
load lots, then routes them from their local ship- 
ping association warehouses through the Twin 
Cities and on out to their destination. The pota- 
toes are kept in the local storage houses until the 
local association desires to ship. But the ex- 
change keeps them advised of conditions and in 
this way the market is not glutted at any one time ; 
the process is entirely orderly and efficient. It 
enables the growers to obtain the best prices for 
their potatoes whenever sold and at a very slight 



176 The Modern Farm Cooperative Movement 



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The Minnesota Potato Exchange 

Fig. 15 



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/9/J /9//- e/3 /9/6 1917 BI6 19/9 /920 eai 

WhOLESAL£ PR/CC "Alt. COA-1MOO/riC$"(uy auH£Aly LA30/M 

handling cost. The Minnesota Potato Exchange 
charges ten cents per hundred pounds for this 
marketing service, a very nominal commission, 
which is generally entirely covered by the addi- 
tional price which it is able to secure. 

In 1920, the exchange controlled 10 per cent of 
the Minnesota crop and that was during the year 
of organization. During 1921, it strengthened its 
position very materially and controlled a consider- 
ably greater portion of the crop. This control as 
to sale is absolutely in the hands of the exchange ; 
the membership is all under contract and it is 100 
per cent compulsory. 

That the business is handled in a manner en- 
tirely fair to all concerned is evidenced in the fact 

12 



178 The Modern Farm Cooperative Movement 

that each association gets a pro rata dividend if 
any is paid, out of the ten cents selling charge im- 
posed, in addition to the price received at market. 
The exchange is truly cooperative and is managed 
on that basis ; it seeks to make no profit, but aims 
merely to perform a service. 

That the production of potatoes will serve to 
take care of itself when orderly marketing is 
assured is evidenced in the fact that during 1921 
the Eed Eiver Valley growers decreased their 
acreage 10 to 15 per cent. Some authorities place 
the increase even higher, running from 25 to 35 
per cent. That the exchange has been a stabilizer 
in other directions is indicated in the fact that 
only one local shipping association succeeded 
prior to the organization of the exchange to every 
ten that failed, and since the exchange was formed 
not one local association member has failed. The 
98 associations comprising the imembership in 
1920 represented 5,000 potato growers in Minne- 
sota, North and South Dakota. 

The exchange publishes a weekly bulletin which 
goes to every individual member associated with 
it. This bulletin contains such pertinent infor- 
mation as market reports, advice on growing, 
spraying and grading potatoes, on storage, ship- 
ping and other points which furnish a distinct 
service to the grower. This bulletin also keeps 



The Minnesota Potato Exchange 179 



$500.00 Minn 192. .. 

On demand, for value received, We 

promise to pay to the order of 

THE MINNESOTA POTATO EXCHANGE, without inter- 
est, the sum of Five Hundred Dollars. 



By 

President 



Secretary. 
Presentation for payment, protest and notice of dis- 
honor, are waived by each maker, endorser and guarantor 
hereof. 



Note Given by Local Association to Minnesota Potato Exchange to Insure 
Pooling Agreement. 



?100.00 Minn., 192 

ON DEMAND, FOR VALUE RECEIVED, I PROMISE 

TO PAY TO THE ORDER OF 

THE SUM OF ONE HUNDRED DOLLARS. 

Presentation for payment, protest and notice of dis- 
honor are waived by each maker, endorser and guarantor 
hereof. 



Note Given by Grower to Local Association to Bind Pooling Agreement. 

the entire membership informed as to what the 
other associations are doing in their respective 
fields. 

During the first year of business the Minnesota 
Potato Exchange carried a volume of business of 
almost $1,500,000 which was close to 2,450 car- 
loads. The increase has been steady and by the 



180 The Modern Farm Cooperative Movement 

close of the present season (1922) they will no 
doubt have doubled these figures. 

The point simply is that the kinks are soon go- 
ing to be taken out of the potato situation, and the 
trick is going to be done through the medium of 
cooperation on the part of the growers. What 
the Minnesota growers are doing can be done by 
growers in other localities, and even in other com- 
modities or groups. But the potato situation is 
perhaps one that is in need of the most attention 
just now. The fact that the Minnesota Potato Ex- 
change is making progress now, in so short a space 
of time, is a distinct victory for farm cooperation. 

Its service has not been merely along the line of 
marketing routine. It has taught the grower the 
necessity of grading his crop according to the 
United States standard, which is the same as the 
Minnesota standard, by compelling him to do this 
in his contract. If he fails to do this he is penal- 
ized not only by the market but by the association. 
Under the supervision of the Minnesota Potato 
Exchange, no such wide fluctuation in size and 
quality of potatoes can occur as is generally found 
in market run of potatoes. 

Fully as much profit is to be obtained in proper 
grading of the crop as in efficient marketing, be- 
cause the market will not accept that which it does 
not want, regardless of price. The farmer who 



The Minnesota Potato Exchange 181 

does not have the advantage of a cooperative sell- 
ing agency can still profit by proper grading of his 
crop. The Minnesota Potato Exchange is per- 
forming all of these services for the member grow- 
ers, and a great many more. In short, it seeks to 
look after the potato welfare of the members in all 
that the term implies. Its success is found in the 
work it is doing. It is one of the leading cooper- 
ative institutions in the Middle West. 

In the thought that the contracts between the 
local shipping associations and their members and 
the local associations and the Minnesota Potato 
Exchange will be of interest to the readers, they 
are presented herewith. The first point we want 
to call attention to in this connection, is the com- 
pulsory pooling agreement. The members of the 
local shipping associations must not only agree to 
sell their entire production through the local ship- 
ping association but they must execute a promis- 
sory note in the amount of $100 which is forfeited 
as compensatory damages immediately upon the 
violation of this agreement. The local associa- 
tion, in turn, must execute a similar agreement 
with the Minnesota Potato Exchange in the sum 
of $500 in case they violate their agreement to sell 
only through the said exchange. These note forms 
are shown in the accompanying illustrations. 



CHAPTER FIFTEEN 

National Live Stock Marketing 

Conditions obtaining at the principal live stock 
markets have long been a source of unrest among 
farmers and shippers. The feeling has long per- 
sisted, whether based on fact or not, that the ship- 
per was not ^^ getting a fair shake'' at the yards. 
This feeling has been played upon by the design- 
ing politician and farm organization. leaders who 
had some personal axe to grind. 

Where there is so much smoke, there is usually 
a little fire. It cannot be said, in the interests of 
truth, that all of the suspicions against the packers 
and the stockyards interests were entirely ground- 
less or that they had no basis in fact. While 
there can be no doubt, if one is charitably inclined, 
that much of the *' abuse" of the interests has been 
grossly magnified and over-estimated. 

We now know, after our study of our marketing 
system, that it was not the men at the yards who 
were abusing the farmer and the shipper so much 
as it was and is the marketing system under 
which the products were handled. The yards 
were in control of interests engaged a great deal 
in speculation on the products delivered there by 
the farmer and shipper. There was an over-accu- 



National Live Stock Marketing 183 

mulation of middlemen, all of whom had to have a 
^' profit'^ upon which to endure. Eules and inter- 
nal organization among these middlemen served 
to protect and preserve them against annihilation 
— the farmer and shipper being made to bear the 
load. 

In his search for economic justice and as a re- 
sult of his study of the principle of cooperative 
marketing, the farmer discovered that the present 
method of marketing is wasteful and inefficient to 
a marked degree. Too much of the consumer's 
dollar is absorbed in middlemen's charges. Farm 
products, and this includes meat products as well 
as other products, follow too round-about a circuit 
in their journey from the farm to the consumer. 
Waste, characteristic as it is of American life, 
existed all along the line. Cooperative marketing 
seemed to offer the best solution for the elimination 
of this waste, and still preserve the normal service 
for which our present marketing system exists. 

The local live stock shipping movement, as we 
have already noted, was the first application of the 
cooperative principle to the live stock industry. 
But it was only a beginning, a tiny rivulet. It 
could not change the course of the great live stock 
marketing stream. The spot where the most seri- 
ous waste existed was at the terminal markets — at 
the stockvards. 



184 The Modern Farm Cooperative Movement 

The same problem was presented to the live 
stock shippers that was presented to the Minne- 
sota potato growers. There must be a coordina- 
tion of the local associations into strong federa- 
tions located at the chief terminal markets, if the 
waste and the abuses of the present system were 
to be removed. It is but natural, then, that the 
solution of the live stock marketing problem 
should have been approached in much the same 
manner as was the solution of the potato problem. 
This difference exists, however. The live stock 
movement is on a much larger and more important 
scale. It is national in character, being planned to 
eventually extend to the principal live stock mar- 
kets of {he country; indeed, today it has been 
established at all of the important markets in the 
Middle West. 

The first work along the line of a national live 
stock marketing plan was taken shortly after the 
United States Grain Growers, Inc., had been 
launched and the grain marketing plan seemed to 
be assured of successful fruition. The live stock 
men of the Middle West held a conference in Chi- 
cago on July 23, 1920, for the purpose of setting 
the proper machinery in motion to bring about 
some plan for national live stock marketing. This 
conference finally arranged for another confer- 
ence to be held on October 8, 1920, at which con- 



National Live Stock Marketing 185 

ference the live stock men authorized the appoint- 
ment of a '' committee of 15^' of their number to 
bring out a plan. 

The committee was finally appointed and pub- 
licly announced on the twenty-third of January, 
1921. It was to make a study of cooperative live 
stock marketing problems and, if possible, formu- 
late a national plan based upon these principles. 
The committee was composed of the following, 
officially known as the ' ' Committee of 15 " : 

C. H. Gustaf son, Chairman, Chicago ; A. Sykes, 
Vice-Chairman, Ida Grove, Iowa; H. W. Mum- 
ford, Secretary-Treasurer, Chicago; Harry G. 
Beale, Mt. Sterling, Ohio; J. E. Boog-Scott, Cole- 
man, Texas; W. J. Carmichael, Chicago; W. A. 
Cochel, Kansas City, Mo. ; C. E. Collins, Kit Car- 
son, Colo. ; E. H. Cunningham, Des Moines, Iowa ; 
Howard M. Gore, Clarksburg, W. Va. ; J. B. Ken- 
drick, Sheridan, Wyo. ; W. A. McKerrow, St. Paul, 
Minn. ; J. H. Skinner, LaFayette, Ind., and 0. 0. 
Wolfe, Ottawa, Kansas. 

The following gentlemen were named as alter- 
nates: John G. Brown, Monon, Indiana; James 
Clemmens, Kansasville, Wisconsin; W. S. Corsa, 
Whitehill, Illinois ; John M. Evvard, Ames, Iowa ; 
E. C. Lasater, Falfurrias, Texas, and Wm. H. 
Pew, Eavenna, Ohio. 



186 The Modern Farm Cooperative Movement 

Some six or seven meetings were held during 
1921 by the Committee of 15 at which ideas were 
exchanged, plans proposed, and methods dis- 
cussed. In the fall of 1921 the Committee of 15 
finally informed President J. R. Howard of the 
American Farm Bureau Federation that it was 
ready to report and requested that he call a na- 
tional conference of live stock men and interests 
to consider and receive this report. 

The result was that the National Live Stock 
Conference was called for November 10, 1921, and 
was attended by delegates from 15 states, repre- 
senting all of the important farm organizations 
and live stock organizations. The report which 
the Committee of 15 submitted to that conference 
was adopted unanimously at the end of a two-day 
session. 

Dr. 0. 0. Wolfe, one of the members of the Com- 
mittee of 15, and now a director of the National 
Livestock Producers' Association, has this to say 
concerning the plan adopted: 

*^The plan as submitted by the Committee and 
adopted by the Conference is frankly built upon 
the cooperative marketing principle. Because the 
introduction of the plan as submitted in the re- 
port states clearly and concisely some of the con- 
siderations that led to the conclusions of the Com- 
mittee, it is herewith quoted : 



National Live Stock Marketing 187 

* * * The Committee early found that the problems 
in connection with live stock marketing which the 
Committee would be obliged to consider involved 
cooperative marketing, orderly marketing, live 
stock production, marketing information, trans- 
portation and finance. 

^ ^ ^ Some live stock organizations fairly and ably 
represent special live stock interests or regions of 
production. Yet these for the most part have not 
been sufficiently financed nor are they sufficiently 
national in scope to function strongly and effec- 
tively. 

'^ ^The need for a national live stock organiza- 
tion representative of a very large number of the 
rank and file of live stock producers in all parts of 
the United States has long been felt. Such an as- 
sociation properly financed and directed should be 
able to represent wisely and with authority the 
live stock producers' interests, wherever and 
whenever they are concerned. 

** ^The Committee has come to feel that such an 
organization can best be built with more efficient 
live stock marketing as its primary purpose. 
Without becoming a burden to anyone such an or- 
ganization should grow to be largely representa- 
tive of live stock producers and easily become self- 
supporting. 



188 The Modern Farm Cooperative Movement 

^' ^The building of such an organization hinges 
upon the willingness of live stock producers to 
cooperate in marketing their live stock and it is 
convinced that until they do so cooperate there is 
little hope of substantial and permanent improve- 
ment in live stock marketing. 

*^ ^To provide the required agencies for the ef- 
fective handling of the live stock marketing prob- 
lems and otherwise promote the best interests of 
live stock producers it is necessary for the pro- 
ducers themselves to have : 

" * First: Producers^ Live Stock Associations 
established at the terminal markets to render 
service to individual producers and cooperative 
live stock shipping associations. 

' ' ^ Second : Producers ' Stocker and Feeder Com- 
panies established in connection with Terminal 
Commission Associations. 

i i i Third : A national organization of live stock 
producers.' 

^'The cooperative marketing plan approved is 
built from the ground up. The individual live 
stock producers of the nation constitute the foun- 
dation. Producers are strongly urged to join 
the local cooperative live stock shipping associa- 
tions. However, if for any reason they do not find 
it to their advantage to do so, they may still avail 
themselves of the selling-at-cost facilities by con- 



National Live Stock Marketing 189 

signing their stock direct to a Producers' Live 
Stock Commission Association that is owned and 
controlled by live stock producers themselves. 

^^As soon as the National Livestock Producers' 
Associations receive assurances that there will be 
sufficient patronage and sufficient memberships to 
finance the undertaking there will be established 
at the terminal markets producers' live stock 
commission associations and the allied stocker and 
feeder companies. These will be truly cooper- 
ative, savings or earnings being returned to pa- 
trons on the patronage dividend basis. This is 
service rendered on a cost basis. 

''Each of the cooperative commission associa- 
tions at the various terminals is entitled to repre- 
sentation on the directorate of the National Live- 
stock Producers' Association. The national 
board of directors will federate, correlate, stand- 
ardize, supervise and promote cooperative live 
stock marketing through the terminal commission 
associations and other agencies and a number of 
these cooperative commission associations have 
already been established. 

"The first board of directors of the National 
Livestock Producers' Association has been ap- 
pointed as follows : Harry G. Beale, Mt. Sterling, 
Ohio; J. E. Boog-Scott, Coleman, Texas; J. G. 
Brown, Monon, Indiana; Chas. E. Collins, Kit 



190 The Modern Farm Cooperative Movement 

Carson, Colorado; E. H. Cunningham, Des 
Moines, Iowa; C. A. Ewing, Decatur, Illinois; 
Howard M. Gore, Clarksburg, W. Va.; Hugh M. 
Sproat, Boise, Idaho, and Dr. 0. 0. Wolfe, Ottawa, 
Kansas. 

^ * It might be well to mention the salaries of this 
board of directors. There have been organiza- 
tions in this country established and supported, 
many have thought, because of the salaries they 
have received. At the first meeting of this board 
in Chicago, the latter part of December (1921), 
it was voted that the compensation was to be only 
the actual traveling expenses. It was felt that 
men should be placed on this committee who are 
substantially interested in the live stock of the 
country to make a little sacrifice of time. This is 
necessary in order to do this properly, and that 
is the principle that is outlined. The board of di- 
rectors are to serve without compensation. No 
member of the board is permitted to be a paid 
officer of the commission. They are to hire and 
not to be employed. This is done as a safeguard. 

**This Board held its first meeting on December 
28-30, 1921, at which time the following officers 
were elected : J. Gr. Brown, Monon, Indiana, Pres- 
ident; Chas. E. Collins, Kit Carson, Colorado, 
Vice-President, and E. H. Cunningham, Des 



National Live Stock Marketing 191 

Moines, Iowa, Secretary-Treasurer. These three 
constitute the executive committee.'^ 

This statement by Dr. Wolfe gives a fair out- 
line of the reasons for the action taken by the 
Committee of 15, the personnel of the committee 
and the resulting board growing out of the adop- 
tion of its plan. The details of the plan will, no 
doubt, be of interest to the reader. 

Membership in the National Livestock Pro- 
ducers' Association is accepted from two sources, 
local live stock shipping associations or other live 
stock organizations and from individual live stock 
producers. The membership fee for cooperative 
live stock shipping associations is placed at a mini- 
mum of $50 for all associations shipping 50 cars 
of live stock or less annually, with an additional 
50 cents for each car of live stock over 50 shipped 
annually. The volume of business determining 
the membership fee was reckoned on the 1921 
business or for the year next preceding the appli- 
cation, as the case may be. 

The fee for individual memberships in the Asso- 
ciation is placed at $10. This is for those shippers 
who are not members of cooperative local shipping 
associations, or those members who ship their own 
stock. 

The first terminal marketing commission or- 
ganized under the above plan opened its doors for 



192 The Modern Farm Cooperative Movement 

business at Chicago on January 2, 1922. Since 
that time other terminal commissions have been 
established at East St. Louis, Indianapolis, Okla- 
homa City, Peoria, and other points are being in- 
vestigated. In almost every instance, the Pro- 
ducers' Live Stock Commission Associations have 
leaped to the head of the column in the point of 
business transacted, and have exhibited a very 
rapid and encouraging growth. The association 
at East St. Louis, for instance, has had the follow- 
ing record during the three full months of organi- 
zation: January (1922) 250 cars; February, 334 
cars and March, 436 cars. The total receipts for 
March were 8,2 per cent of all business received at 
the National Stock Yards. 

Probably none of the farm cooperative federa- 
tion movements have at once secured the support 
and attained the position of dominance in their 
fields in the same space of time, that has come to 
the Producers' Live Stock Commission Associa- 
tion. This has been due, in part, to the fact that 
it offered tangible results to start with ; that is, it 
commenced to handle live stock and the producers 
could actually see the plan in operation. Another 
reason for the support which it has received has 
been due, no doubt, to the fact that it was effi- 
ciently organized and an economical plan of or- 
ganization adopted. The matter of ** salaries'' 



National Live Stock Marketing 193 

was wisely decided. The Committee of 15 profited 
from the mistakes of the United States Grain 
Growers, Inc., and did not lay itself open to the 
attack of the opposition on this score. 

Another reason is no doubt found in the fact 
that the average live stock producer is more alive 
to the opposition he encounters at the yards, and 
has been more thoroughly schooled in the true co- 
operative spirit. He has long been familiar with 
the rudiments of cooperative marketing through 
his membership in and affiliation with the local live 
stock shipping association, while other farm pro- 
ducers in other commodity groups have not been 
so well favored on such a wide scale. 

What the National Livestock Producers' Asso- 
ciation will ultimately achieve is, of course, merely 
a matter of conjecture. But the future seems un- 
usually attractive. The organization is actually 
functioning and has been gaining ground steadily, 
meeting that acid test of worthiness in the business 
world, competition. What it will be in the future 
depends wholly upon the character of the manage- 
ment and whether the officers at the head of the 
organization will continue to be willing to put the 
cause above self and serve the interests of all in 
this unselfish spirit. 



13 



CHAPTER SIXTEEN 

National Dairy Marketing 

Strict national dairy marketing, as has been 
already perfected in the case of live stock and as 
in process of organization in grain, has not been 
worked out. A national dairy marketing commit- 
tee of 11 has been appointed, however, and is now 
at work upon a national plan which will enable 
the producers of dairy products to form some kind 
of a national cooperative dairy marketing federa- 
tion. 

It may seem a bit of a paradox that dairy prod- 
ucts should be among the last of the commodity 
groups to form a national federation, whereas 
dairy products were among the very first to per- 
fect local organizations in the early history of 
the cooperative movement. This ma^ be ex- 
plained, in part, by the fact that the nature of the 
products coming from the dairy industry are such 
that they must, m the majority of cases, be mar- 
keted close to the source of production. The trade 
territory of the average cheese factory or cream- 
ery is usually regional, rather than national in 
scope. At least that has been the thought which 
has grown up through past marketing customs. 



National Dairy Marketing 195 

There has been more or less of a federation 
movement in many of the chief dairy centers of 
recent years, notably in Wisconsin and in Wash- 
ington. In the former state the Wisconsin Cheese 
Producers' Federation is a well-known example in 
the cooperative world. 

A recent statement issued by H. B. Nickerson, 
a member of the ^ ' Committee of 11, ' ' president of 
the Minnesota Cooperative Creamery Association, 
and vice-president of the Twin City Milk Produc- 
ers ' Association, concerning the Wisconsin feder- 
ation gives an interesting review of its history and 
achievements in the dairy marketing field : 

^'The Wisconsin Cheese Producers' Federation 
was organized in 1914 and has had a gradual de- 
velopment. On July 1, 1921, there were 120 fac- 
tories as members, located in 15 different counties. 
Cheese was handled from these factories to ware- 
houses, one located at Plymouth and one at Spring 
Green. During 1920 warehouse cheese was 
shipped to 37 states. At the present time the Fed- 
eration is marketing the cheese of the 33 factories 
comprising the Minnesota Cheese Producers' 
Federation. 

* * The Wisconsin Cheese Federation is a cooper- 
ative organization, controlled by its farmer mem- 
bers. The farmers in and around the local cheese 
factory form a Cooperative Cheese Producers' 



196 The Modern Farm Cooperative Movement 

Association, to which they pay $1 membership fee 
each, and out of the money thus raised, they take 
one $10 membership in the Wisconsin Cheese Pro- 
ducers ' Federation. The local cooperative organ- 
izations each elect a board of five directors, from 
which are selected a president, vice-president, sec- 
retary and treasurer. Only members can vote on 
anything pertaining to the Federation. In order 
that money may be raised to build needed ware- 
houses and storages for the handling of the farm- 
ers ' cheese, a company called the Wisconsin 
Dairymen's Storage Company has been formed 
with a capital stock of $125,000. Of this $2,000 
is common stock and the balance is preferred 
stock. 

*^The Federation is insisting that the members 
in the local cooperative associations sign a con- 
tract for five years. The Cheese Producers' Fed- 
eration sells only the cheese of its members, which 
is paid for on the basis of the selling price minus 
the handling cost, which is in the neighborhood of 
50 cents per hundred pounds at the present time. 

^^The Wisconsin Cheese Producers' Federation 
is now putting a special branded cheese, standard- 
ized and of a guaranteed quality, under the trade 
name of * ' Mello-Creme. ' ' They are attempting to 
build up a market for this cheese which will net an 
additional profit to the producers. It has been the 



National Dairy Marketing 197 

custom in the past for private dealers to follow the 
prices as established by the so-called Plymouth 
Cheese Board, and to pay for all cheese as poor 
cheese. This failure on the part of the cheese buy- 
ers to recognize quality as the basis in the pur- 
chase and also the fact that there has been no 
attempt to reduce the wide margin that exists 
between the price received by the producer and 
that which the consumer has to pay has been of 
great injury to the cheese industry. The private 
dealers have followed the practice of forcing the 
price of cheese to an unwarranted low level during 
the months of high production to enable them to 
fill their warehouses with cheese which could be 
held for later markets at a higher price. 

**The Committee was informed that in 1921 dur- 
ing 19 weeks of the heaviest milk producing pe- 
riod, about 70 per cent of the annual output of 
cheese was produced and sold for less than 14 
cents per pound. Investigations among stores re- 
tailing cheese at the present time shows that they 
are selling this American Cheddar Cheese all the 
way from 40 cents to 65 cents per pound. The 
Wisconsin Cheese Producers' Federation is hop- 
ing to be able to develop its organization until it is 
able to follow a majority of the cheese produced in 
Wisconsin from the producer to the consumer. It 
is the object of this cooperative organization to 



198 The Modern Farm Cooperative Movement 

increase the consumption of cheese through adver- 
tising and educational work, and to reduce this 
present wide spread between the producers ' price 
and what the consumer has to pay in the retail 
trade. In doing this the farmers are going to put 
a guaranteed product on the market. ' ' 

The Wisconsin Cheese Producers' Federation 
has been financed at a very low figure, it would 
seem, judging from the standards set in other co- 
operative organizations. It commenced business 
in 1914 with only $2,000 authorized capital of 
which only $651.69 was paid up.* By 1919 the 
federation marketed about 14,000,000 pounds of 
cheese at a value of $4,306,599, and had a capital 
stock of only $1,320, a surplus of $37,694 and an 
undivided net income of $26,017. According to 
Macklin,lt *^ required equipment capital amount- 
ing to $46,948 or 20 per cent of the total capital, 
and circulating capital of $187,585 equal to 80 
per cent of the total. ' ' It is obvious that the great 
bulk of the financing has come from outside 
sources. 

The federation, like many other cooperatives 
starting out with a small capitalization, soon came 
to a point in its development where the original 
member factories had built up a profitable busi- 
ness, had allowed past earnings to accumulate in 



* Efficient Marketing for Agriculture, Theo. Mackliii, p. 257. 



National Dairy Marketing 199 

order to furnish additional capital to aid in financ- 
ing the rapidly expanding business, and were met 
with the problem of how to distribute the earnings 
properly to the new patrons who were furnishing 
volume but had furnished no considerable share 
of the surplus which had been piled up prior to 
their affiliation with the federation. This was 
finally met by the adoption of a resolution known 
as Article VI of the by-laws : 

"The board of directors shall have authority to issue shares 
of stock or the promissory notes of this association, in payment 
of patronage dividends to stockholders, and to provide for a 
method of rotating capital based upon the tonnage of cheese 
marketed by the stockholders through this association." 

The Wisconsin Cheese Producers ^ Federation is 
on a firmer basis today than ever before and with 
the gradual elimination of the financing troubles 
which have been a problem to the management in 
the past, it seems assured of a place of influence 
and power in the commercial world. Especially 
significant is the branding and advertising of its 
products over trade names. 

UNITED DAIKY ASSOCIATION 

The United Dairy Association of Washington is 
a fair example of what can be done in the market- 
ing of milk and milk products on a cooperative 
basis. Three years ago the Association was not in 
existence. Today it is operating seven major 



200 The Modern Farm Cooperative Movement 

plants and three minor plants in the state of 
Washington, representing an investment of capi- 
tal of $1,500,000. The seven major plants, located 
at Lynden, Bellingham, Burlington, Mt. Vernon, 
Arlington, Snohomish and Chehalis, are capable 
of handling 1,000,000 pounds of milk daily during 
the peak of the surplus production period. Dur- 
ing 1921, the total output of these plants reached 
a total of approximately $5,500,000, and according 
to Mr. J. A. Scollard, president, it is anticipated 
that they will do a business of $8,500,000 in 1922. 

Mr. Scollard, in a recent article in The Wash- 
ington Farmer, gives these details concerning the 
plan of organization of the United Dairy Associa- 
tion : 

* ' The United Dairy Association of Washington 
is made up of one representative from each county 
association; its nominal capital stock is $100, 
made up of 20 shares at $5 per share. This asso- 
ciation had no money with which to undertake the 
marketing of such a vast quantity of products in a 
manner that would admit of payment to the pro- 
ducer for his milk on a monthly basis ; the direc- 
tors realized that to open up the market and suc- 
cessfully dispose of the immense output of the 
association plants would require men of experi- 
ence as well as the necessary capital. 



National Dairy Marketing 201 

*^Tliey, therefore, caused to be formed the 
Consolidated Dairy Products Company. This 
company had paid up capital of $250,000 and was 
organized for the sole purpose of selling associa- 
tion products. The basis of its formation was a 
contract with the United Dairy Association of 
Washington whereby the latter was to sell through 
it the association products not disposed of locally. 

^^A rigid investigation of the selling costs of 
various dairy products was made by the United 
Dairy Association of Washington and the commis- 
sion on sales by the Consolidated Dairy Products 
Company were based on the results of this selling 
cost investigation. The contract between the 
United Dairy Association of Washington and the 
Consolidated Dairy Products Company is for one 
year and contains three salient features which 
fully protect the association. 

^ ' First, the contract can be terminated by either 
party on 60 days' notice and the association has 
the option of buying, at cost less depreciation, the 
distributing machinery of the Consolidated Dairy 
Products Company in the event the contract is 
terminated. 

'* Second, the association fixes the selling prices 
of all commodities sold. 

^* Third, commissions, as fixed by the contract, 
are subject to revision whenever it becomes ap- 



202 The Modern Farm Cooperative Movement 

parent that they are out of line with actual selling 
costs. 

' ' The contract further provides that the United 
Dairy Association of Washington shall have one 
of its members on the board of directors of the 
Consolidated Dairy Products Company with ac- 
cess to all records. A monthly statement of all 
sales and transactions is rendered to the associa- 
tion. 

**The present system of sales is conducted as 
follows: All sales of canned milk in western 
Washington is made direct to the retailer. In 
eastern Washington, Montana and Idaho the dis- 
tribution of all commodities is made through job- 
bers, shipments being made in carload lots. The 
selling organization, however, maintains salesmen 
who cover these fields. The Consolidated Dairy 
Products Company has a branch in Tacoma and 
active sales agencies in Portland and Los Angeles, 
a branch selling agency will be established in San 
Francisco this year (1922), and we are now enter- 
ing into arrangements with the California dairy- 
men's associations to supply them with canned 
milk, a commodity which they do not manufacture. 

** Practically all of our butter and cheese, with 
the exception of what is disposed of locally, is sold 
in Seattle; the former in cubes. Considerable 
quantity, however, goes to Alaska where. we are 



National Dairy Marketing 203 

rapidly winning favor in that market with the ex- 
cellent flavor and keeping qualities of our butter. 

^^Our immense output of milk powder, packed 
in 200-pound barrels, is largely consumed by the 
baking industry to which we have access through 
the largest bakery supply house in the United 
States. We recently contracted with this concern 
for the sale of 50 carloads of 60,000 pounds each, 
for delivery prior to August 1, 1922. The 50 
carloads above mentioned, amounting to about 
3,000,000 pounds will consume our surplus make 
until that date. 

^^We are supplying practically all of the skim 
milk powder used by Washington buyers, but the 
great bulk of this product is distributed in large 
and small lots in practically every state in the 
Union, as well as in the export trade. We have 
demonstrated the superiority of milk powder 
made from Washington milk over all others.'^* 

The United Dairy Association of Washington is 
organized in the six principal counties of Wash- 
ington, so far as the dairy industry is concerned, 
and has an active membership of approximately 
6,000 dairymen and farmers. Each dairyman- 
member is under a strong contract with the local 
association whereby he agrees to sell it all of his 
milk or cream, the association in turn agreeing 



* The Washington Farmer, March 2, 1922, p. 6. 



204 The Modern Farm Cooperative Movement 

to find the best possible market for it. The local 
association is, in turn, under contract with the 
United Dairy Association of Washington, making 
the latter its sales agent for all of its surplus or 
finished products. 

Mr. Scollard gives the following reasons for the 
success of the United Dairy Association of Wash- 
ington : 

^^1. Our determination to turn out products of 
the highest quality. We have carried out this 
policy, which was made possible by strict meth- 
ods of standardization in modern, well-equipped 
plants. 

* ^ 2. The fact that we organized and built plants 
in all of the counties simultaneously, making it 
possible to present a solid front all along the line, 
thus withstanding the onslaught of our vindictive 
enemies. It is safe to say that operating on a sep- 
arate unit not one of our associations would have 
survived the year. 

**3. The decision of our directors to enlist suffi- 
cient private capital and experienced, capable men 
in our marketing program. Our associations 
would not be in existence today had we adopted 
pooling or other plans and failed to pay the dairy- 
men fully for their milk once each month. We 
have never resrrotted this decision. 



National Dairy Marketing 205 

^^4. Last, but not least, the splendid loyalty and 
morale of our membership in almost completely 
cooperating in every way. The earnest and capa- 
ble men who formed the leadership of the county 
associations were responsible for this spirit and 
their own sacrifices of time and effort gave the 
members confidence and strength in supporting 
their policies/^ 

TWIN CITY MILK PKODUCEKS ' ASSOCIATION 

Another strong federation of dairy producers 
is the Twin City Milk Producers^ Federation lo- 
cated at Minneapolis and St. Paul, Minnesota. 
This organization is composed of more than 3,000 
member dairymen and farmers living in and 
around the Twin Cities. A large number of 
creameries, factories, a powdered milk factory, 
and other plants are operated by this thriving 
dairy marketing association. 

There are in all some 54 local organizations 
affiliated with the central selling agency which 
handles all of the products produced. The stock 
in the association it divided into $50 shares for 
each four cows milked. These shares may be paid 
for with 5 per cent of the monthly milk check, if 
the producer so desires. Dividends are fixed at 6 
per cent, and in October, 1921, the association had 
a surplus on hand of $40,000, which was used for 
a sinking fund. 



206 The Modern Farm Cooperative Movement 

Mr. H. R. Leonard, manager of the association 
in an address before the national dairy marketing 
committee of 11, stated that the greatest problem 
to be solved, so far as national dairy marketing 
was concerned, was how to handle the huge sur- 
plus in the surplus producing months of the year. 
He stated that the plant operated at Northfield by 
the association had turned to butter making the 
summer before and had enabled the producers 
around that town to continue to market their milk 
at a time when there would have been no market 
for it, due to the low price of condensed milk. The 
association has also established a powdered milk 
plant at Anoka, Minnesota, for the purpose of ab- 
sorbing much of the surplus. 

Education along the line of producing fall milk 
will help very materially in this direction, and Mr. 
Leonard feels that the function of any cooperative 
marketing association does not end with the mere 
handling of the dairy products. He expects it to 
lead the way in this educational work. 

The Twin City Milk Producers ' Association has 
spent a great deal of effort along the line of sta- 
bilizing supply and providing the facilities for 
handling it. The next greatest service it renders 
is the service to its dealers, through which it vir- 
tually controls the supply of milk furnished the 
people living in those two cities. All dealers are 



National Dairy Marketing 207 

under contract, as well as all producer-members. 
The latter cannot leave the association except on 
June 1 each year and then only upon 30 days' 
notice prior to that date. 

The sales to the dealers in the Twin Cities have 
doubled since 1918, indicating that the quality of 
the product and of the service is winning its way 
even in the face of a competition not ordinarily 
accorded a privately owned concern. The Twin 
City Milk Producers' Association now dominates 
the situation in its trade territory. 



CHAPTER SEVENTEEN 

The U. S. Grain Growers, Inc. 

The United States Grain Growers, Inc., repre- 
sents what has been characterized as * * the great- 
est cooperative effort in the history of agricul- 
ture.'' In other words, it is the attempt of the 
grain growers of the United States to cooper- 
atively market their own grain to the consuming 
public, to prevent speculation in grain, and to 
stabilize prices by orderly marketing. 

The first attempt at a national federation move- 
ment in any of the principal commodity groups 
was that of grain. Grain, as we have already seen 
in the previous chapters, has ever been the enter- 
ing wedge and the rallying point in the cooper- 
ative movement; it marked the founding of the 
local cooperative elevators in the early 90 's; it 
marked the origin of the Equity Cooperative Ex- 
change, the first true business cooperative organi- 
zation to successfully market grain; and, so, it 
marked the first attempt at a national cooperative 
marketing plan. 

On July 23-24, 1920, a national marketing con- 
ference was held in Chicago largely composed of 
grain growers and shippers of strong cooperative 



The TJ. S. Grain Growers, Inc. 209 

marketing leanings. This conference was com- 
posed of the representatives of all of the principal 
farm organizations and cooperative concerns in- 
terested in the subject of grain marketing. They 
had assembled for the frank and avowed purpose 
of determining whether it would not be possible 
to perfect a national organization uniting the 
efforts of the various localized units into one 
strong and capable grain marketing agency owned 
and controlled by the farmers of the land. 

Attempts had been made in this direction be- 
fore, but they had always ended in failure. It 
seems to be a certainty that as soon as a number 
of farmers attempt to *^get together'^ the pro- 
verbial monkey-wrench appears from that mys- 
terious source known as the *^dark spot.'' 

We quote from a booklet issued by the depart- 
ment of information of the United States Grain 
Growers, Inc.: 

**But the conviction remained that the farmers 
of America could market their grain to their ad- 
vantage — honestly, uprightly, and in a business- 
like way — as well as manufacturers of farm ma- 
chinery, harness and clothing merchandise their 
products. The men in this national conference 
had that conviction. They believed in the good 
sound business ability of the rank and file of the 
farmers of the United States. They trusted in the 

14 



21U The Modern Farm Cooperative Movement 

conservative judgment and cautiousness that is 
inherent in the man who tills the soil and must cor- 
relate weather conditions, crop pests, soil condi- 
tions and price fluctuations in the conduct of his 
annual business. Unity had been the weak point 
in their cooperation. As between the cooperative 
efforts of the different cooperative organizations 
they realized that the greatest weakness had been 
that they had not cooperated with each other. 

^^So out of this national marketing conference 
there came the Farmers^ Marketing Committee of 
Seventeen. These seventeen men represented 
state and national organizations of farmers who 
were interested in the marketing of grain. Some 
members of the committee selected, either wholly 
or in part, represented the interests of the public 
— the consumers of grain. .... 

^^The Committee of Seventeen represented the 
following organizations: Nebraska Farmers' 
Union, Iowa Farmers' Grain Dealers' Associa- 
tion, Illinois Agricultural Association, Equity Co- 
operative Exchange, Michigan Farm Bureau, Mis- 
souri Farmers' Grain Dealers' Association, Na- 
tional Farmers ' Equity Union, American Agricul- 
tural Editors' Association, Missouri Farmers' 
Clubs, Oklahoma Farmers' Union, State Agricul- 
tural Colleges, United States Department of Agri- 
culture, Farmers' National Grain Dealers' Asso- 



The U. 8. Grain Growers, Inc. 211 

elation, Kansas State Farm Bureau, Ohio State 
Grange, American Farm Bureau Federation and 
South Dakota State Bureau of Markets. 

* ^ Nearly seven months were spent in an exhaus- 
tive study of cooperative grain marketing by the 
Committee of Seventeen. With money furnished 
by different farmers^ organizations, sub-commit- 
tees visited every successful cooperative agency 
in the United States and Canada. A study of re- 
ports from foreign cooperative enterprises was 
included. Four of the best statisticians and in- 
vestigators from the Federal Trade Commission 
and the United States Department of Agriculture 
were secured to compile exhaustive data on the 
grain trade, both domestic and export, and to tab- 
ulate and chart the information so that the facts 
could be readily understood. The best informed 
men on the grain trade, those opposed to coopera- 
tion as well as those who favored it, met and 
talked with the committee. Those opposed to co- 
operation tried to tell the committee that the 
farmers could never hope to get nearer the central 
markets than the local cooperative elevator — ^but 
the Committee of Seventeen thanked them for 
their suggestions and kept on sawing wood. 

*^They found that seventy- two per cent of our 
wheat is marketed within ninety days after har- 
vest. And they incorporated as one of the first 



212 The Modern Farm Cooperative Movement 

basic principles of their marketing plan the fact 
that there must be a more orderly movement of 
grain to market so as to avoid market gluts that 
play into the hands of the speculator. They found 
that some of the greatest profits are made in mix- 
ing, regrading and conditioning grains, and they 
incorporated the fact that the farmer must do 
these jobs himself if he is to realize more nearly 
the market value of his crops. 

^*They found that false market reports of for- 
eign crop conditions give the farmer low prices 
and do not lower the price to the consumer. And 
the principle of an unbiased crop reporting serv- 
ice to be gathered and disseminated by the farm- 
ers themselves was added as part of the market- 
ing plan. They found that over fifty times as 
much * grain' is sold in the pits of the Chicago 
Board of Trade every year as is actually mar- 
keted in the Chicago market and that these trans- 
actions in imaginary grain affect the cash price 
of the real grain to the detriment of the producer 
and the consumer. They included in their plan 
the fact that by direct selling from farmer to 
miller or exporter, both producer and consumer 
would be benefited. They found that a Canadian 
export company had effected savings of from 
three to five cents a bushel over what privately 



The v. 8, Grain Growers, Inc. 213 

owned export companies had exacted, and they 
included an export company in their plan. 

^'They found numberless instances of wastage 
in transportation and equipment — Nebraska wheat 
shipped to Chicago, thence to Minnesota to be 
milled and then back to Nebraska as flour; wheat 
received in Chicago from Kansas City and recon- 
signed to St. Louis; only twenty-three per cent of 
terminal elevator capacity ever used and grain 
forced to bear the burden of such short-sighted 
investment and needless duplication of overhead 
expenses, over and over again. 

'^ Gradually, the marketing plan of the Commit- 
tee of Seventeen shaped itself into a national 
farmers^ cooperative marketing company — a non- 
stock, non-profit corporation which * differs from 
existing marketing methods in that it recognizes 
capital only as a servant, remunerating it for its 
service value only, and returns to the producer the 
proceeds of his toil in proportion to his pat- 
ronage.' 

^'On February 17, 1921, the plan of the Com- 
mittee of Seventeen was announced. Then fol- 
lowed the National Ratification Conference in 
Chicago, April 6-8, where official delegates from 
every farmers' organization in the twenty-three 
grain states were called to consider and adopt or 
reject the plan. And there was only one point in 



214 The Modern Farm Cooperative Movement 

the plan upon which there was a .difference of 
opinion; namely, pooling of wheat. The com- 
mittee plan offered the grower the choice of se- 
lecting the pooling method, direct sales method or 
consignment. Some delegates wished to make it 
compulsory for every wheat grower to pool one- 
third of his wheat. Such an amendment was pro- 
posed and for more than a day and a half it was 
the one subject before the conference. It was de- 
termined that, in view of the fact that a national 
pool of any food commodity had never been tried, 
it would be unwise to accept the proposed amend- 
ment to the committee's plan in that it might jeop- 
ardize or prevent the successful operation of the 
national cooperative plan. The original report of 
the Committee of Seventeen was then unani- 
mously adopted. 

*^The delegates to the national conference then 
elected the board of twenty-one directors who 
were to proceed with the organization of the new 
company. On April 16th, the United States Grain 
Growers, Inc., was incorporated as a non-stock, 
non-profit corporation. It is an organization of 
farmers, by farmers, for farmers. Its success de- 
pends upon the cooperation of all grain growers. 
It is purely a business proposition — on a cooper- 
ative basis — designed to secure more satisfactory 
and stable marketing conditions and better prices 



The U. S. Grain Growers, Inc. 215 

through the practice of efficient and economic mar- 
keting methods, without disadvantage to the con- 
sumer. ' ' 

Since the organization of the United States 
Grain Growers, Inc., until the present writing, one 
year later, the sole accomplishment of the concern 
has been along organization lines. According to a 
recent news letter issued by the department of in- 
formation of the United States Grain Growers, 
Inc., the organization has more than 50,000 
grower members and some 1,100 cooperative ele- 
vators affiliated with it, representing more than 
100,000,000 bushels of grain. 

It remains to be seen whether the United States 
Grain Growers, Inc., will be the success antici- 
pated for it by the Committee of Seventeen. No 
one, save the opponents of the principle of cooper- 
ative marketing, has arisen to criticise the plan 
furnished by the Committee of Seventeen; even 
the opponents of the movement testify, by their 
actions, to the fact that it is a water-tight proposal 
and would be most likely to do the things it was 
intended to do, if given a fair trial. But there has 
been tremendous criticism of the United States 
Grain Growers, Inc., — criticism developing within 
its own ranks and the ranks of those who at first 
were enthusiastic supporters of the Committee of 
Seventeen plan. 



216 The Modern Farm Cooperative Movement 

The chief criticism arising has been that the 
management has been extravagant and dilatory 
in bringing to fruition the actual marketing plan 
of the Committee of Seventeen; that nothing has 
been done to afd the grain grower in the actual 
marketing of his grain ; that too much money has 
been spent in salaries for the officers, in renting 
expensive office quarters, and in ill-advised public- 
ity efforts. 

Opposition which developed at the original rati- 
fication conference prior to the organization of the 
United States Grrain Growers, Inc., over the pool- 
ing plan has smouldered along throughout the 
year and finally came to an open head at the first 
annual convention of the corporation held in Chi- 
cago in March, 1922, where the ^'poolers'' w^ere 
routed and defeated and not re-elected to the 
board of directors. It is charged by the manage- 
ment that the extravagance practiced during the 
first year of existence was directly due to the in- 
competence of the retiring treasurer and leader 
of the pooling faction. 

Just what will come of the movement, is hard to 
predict. Actual grain handling has not been 
taken up, although it is promised that it will be 
commenced during the summer of 1922, when 
grain handling points will be established through- 
out the Middle West. Time alone can tell whether 



The U. 8. Gi^ain Growers, Inc. 217 

or not the warring factions will be able to place 
the welfare of the grain grower above self and put 
into execution the plan of the Committee of Sev- 
enteen. 

Of course, there has been a determined fight 
waged against the movement from the organized 
grain trade. This has taken the shape of propa- 
ganda, speeches from paid speakers, and publicity 
of all sorts. It is but natural that the grain trade 
should oppose a farmer-owned and controlled 
grain marketing agency, and it was anticipated by 
the Committee of Seventeen. 

If the United States Grain Growers, Inc., goes 
down to defeat it will mark a severe blow to the 
federation cooperative movement; it will not nec- 
essarily indicate a weakness in the plan formu- 
lated by the Committee of Seventeen but a weak- 
ness in the whole personnel of the management 
chosen to put that plan into execution. It is too 
early to state whether the movement will fail or 
not; in some respects, it has failed and will con- 
tinue to operate under an increasing handicap due 
to the failure to find a means to handle grain, even 
on a limited scale; in other respects, it has made 
substantial progress in that its own management 
has been definitely determined and the policy defi- 
nitely established, and a policy of retrenchment 
and economy followed the past few months. 



218 The Modern Farm Cooperative Movement 

Its case rests in the hands of the grain growers 
back on the soil who make up the present or po- 
tential membership. Their decision will decide 
the fate of the movement. 

Membership in the United States Grain Grow- 
ers, Inc., costs the individual grain grower $10 
and this sum is paid but once. It is not an annual 
payment or dues. Experience the past year has 
shown that a good share of this payment goes to 
the solicitor securing the membership contract, 
the cost running in various states from $3 to close 
to $8 per member signed, depending upon the effi- 
ciency of the local organization. 

Briefly, the plan contemplates the use of local 
cooperative elevators as the first link in the chain. 
The farmer delivers his grain to this elevator, as 
in the past. The elevator ships it to the selling 
agency established at the terminal markets by the 
United States Grain Growers, Inc., instead of to a 
privately owned commission house as in the past. 
This selling agency sells the grain and after de- 
ducting its charges returns the balance to the local 
elevator, which in turn discharges its loans in- 
curred for money advanced in payment of grain, 
or prorates it to the patrons making up a pool, if 
sold on pool or consignment. 

The plan for handling grain, as set out by the 



The U. .8. Grain Growers, Inc. 219 

department of information of the United States 
Grain Growers, Inc., is as follows : 

Two kinds of contracts are provided in the marketing plan 
of the United States Grain Growers, Inc. One contract is be- 
tween the individual grain grower and his local cooperative 
elevator or local grain growers' association (where there is no 
local cooperative elevator). The other contract is made be- 
tween the local cooperative elevator or grain growers' associa- 
tion and the United States Grain Growers, Inc. 

The grain grower executes his contract, by which he agrees 
to market all of his surplus grain through the marketing or- 
ganization for a period of five years, at the time that he be- 
comes a member. The membership fee is $10. This fee is 
paid but once. 

Grain that is required and used by the grower or sold by 
him locally for local use for seed or feed or sold otherwise with 
the written approval of the United States Grain Growers, Inc., 
is exempt from the contract. The provision for written ap- 
proval will allow of quantities of grain to be milled locally to 
meet the requirements of the local district. 

The individual grower may elect to sell his grain under any 
one of four options provided for in the growers' contract: 

1. It may be sold to the farmers' local cooperative company 
or grain growers association just as at present. The grower 
will receive the current market price at time of sale as he does 
at present. His advantage will be that savings made by the 
export company, conditioning plants, warehousing company, 
transportation department, sales department, etc., will increase 
the average price paid to the grower. 

2. It may be shipped on consignment. 

3. It may be pooled locally. In that case the time and place 
of pooling is in the hands of a local pooling committee elected 



220 The Modern Farm Cooperative Movement 

by the farmers who place their grain in the pool. Each grower 
will receive the average price for the pooled grain of each 
grade. Two or more local communities may put their grain 
into a joint pool in which ease the control passes to the pooling 
committee of the United States Grain Growers, Inc. Pools 
may be township wide, county wide, state wide or national. 
The development of the pooling feature under the contracts 
depends upon whether the growers find this method of mar- 
keting to be most satisfactory. 

4. In the case of wheat, one-third or the exportable surplus 
of each member's crop may be put into an export pool if he so 
elects. The other two-thirds may be handled under any one of 
the first three options as the grower may decide. 

One of the strongest points about this plan of cooperative 
grain marketing is the ease with which it can be put into oper- 
ation. To start with, the grain may be handled locally with no 
change from the present method — the grower simply selling his 
grain to his local farmers' elevator company. The only change 
anywhere along the line wiU be that the grain will be sold at 
the terminals by the selling department of the United States 
Grain Growers, Inc., instead of by a private commission house, 
as at present. 

In an advisory way, the United States Grain Growers, 
through its statistical department, will have full information 
regarding world conditions affecting supply and demand. It 
can advise local elevator companies as to the best time and 
place to ship. It can by lease or otherwise acquire terminal 
warehouse space for the use of elevator companies which wish 
to store grain for, a later market. Through its finance corpo- 
ration, it will be able to loan money on stored grain so that 
financial pressure will not force it onto the market at an un- 
favorable time. 



The V. S. Grain Growers, Inc. 221 

Again, by the gradual development of pooling, if this 
method proves by actual trial to be an advantageous way of 
handling grain. The first step in pooling is the local pool 
which is easy to start and manage and is wholly in the control 
of the local growers. This can be followed later by pooling on 
a larger scale by combining local pools into joint pools and 
transferring the control over the time and place of marketing 
to the pooling committee of the United States Grain Growers, 
Inc. 

One great advantage of the plan is that the grain is handled 
at cost from the time it leaves the farmers' hands. Local ele- 
vators, in order to be a basic part of the plan, must be truly 
cooperative. This means that they must do business at cost 
and that all profits after paying necessary expenses, including 
reasonable dividends on capital invested in the business, are 
paid back to the growers in proportion to the amounts and 
grades of grain delivered. 

Another great advantage of the plan is that the grain mar- 
keting organization will be owned and controlled by farmers 
from start to finish. No one but an actual producer of grain 
can be a member of the United States Grain Growers, Inc., or 
have a vote in the organization. No one but an actual pro- 
ducer of grain can hold office in the United States Grain Grow- 
ers, Inc. 

Now just a word about the folks v/ho eat the food that we 
produce. They may look upon this grain marketing plan with 
suspicion, and who can blame them? They have been exploited 
and gouged and overcharged so long that they have come to 
expect it. 

It is the hope of the Board of Directors of the United States 
Grain Growers, Inc., to familiarize the consumer with funda- 
mental facts about food production and distribution. We 



222 The Modern Farm Cooperative Movement 

want him to appreciate the fact that a prosperous nation is 
dependent upon a prosperous agriculture and that a pros- 
perous agriculture will reduce the living costs of the nation. 
Two-thirds of the people of the United States live in towns 
and cities. They live and eat only by virtue of the toil of the 
man on the farm. Unless the farmer receives a fair return for 
that toil he cannot adopt improved methods of production, he 
cannot maintain and increase soil fertility, he cannot prepare 
for the day when the farmers of America will have two hun- 
dred million people to feed. 

We want him to realize, too, how small a part of the dollar 
that he pays for food ever gets to the farmer — two cents out 
of the eight or ten he pays for a loaf of bread or three cents 
out of the fourteen he pays for a quart of milk. We want Mm 
to understand how efficient marketing and distribution of farm 
crops can give the farmer more for his labor and, in turn, cost 
the city man less for his food. 

The central feature of the United States Grain 
Growers, Inc., organization is the five-year con- 
tract which the growers and elevators affiliated 
with it must sign as a prerequisite to membership. 
These contracts are set out in full in Appendix A, 
in the back of this book. 

Under the contracts, the growers agree to con- 
stitute the United States Grain Growers, Inc., 
their sole selling agency for the term of the con- 
tract, except for such grain necessary for seed or 
home use, or grain milled locally. The contracts 
were drawn up by expert legal talent and there is 
no doubt concerning their legality. 



The U. S. Grain Growers, Inc. 223 

The future of the movement, as already indi- 
cated, depends upon whether or not the corpora- 
tion succeeds in establishing and financing selling 
agencies at the principal terminal markets as 
promised, and actually handles grain. Unless this 
is done, the whole movement will fall of its own 
weight. When it will be done is a matter of con- 
jecture at this time. 



CHAPTER EIGHTEEN 

Other Federation Movements 

It would be impossible, in a work of this kind, 
to treat specifically of all of the cooperative move- 
ments which have achieved the right to be pointed 
out as successful or indicative of success. It 
would require many volumes the size of this one 
and years of time and effort to tell the whole story 
about the farm cooperative movement. 

There are many other federation movements 
which we have not had an opportunity to consider. 
Many of them are still in the formative period; 
others are merely beginning to take definite shape 
and form in the minds of farm organization lead- 
ers, and others have merely been suggested by 
competent authorities as problems for future at- 
tention. 

And there are many federation movements ac- 
tually set up and operating at the present time in 
various parts of the Middle West deserving of 
more attention than we have been able to give 
them. Movements which are performing a sub- 
stantial service to the farmers in the communities 
where they operate ; and there are many federa- 
tions of local cooperatives which operate in a 
more or less restricted territory which should 



other Federation Movements 225 

have attention, in passing at least, before we close 
the book on the Federation Movement. 

Among the more outstanding of these are the 
various Farmers' Union Exchanges and Live 
Stock Commissions; the Missouri Farm Clubs 
local shipping associations, elevators and commis- 
sions; various state federations such as the Iowa 
Federation of Cooperative Live Stock Shipping 
Associations, the various state wool pools, the 
Wheat Growers' Association and other grain 
grower organizations ; numerous state finance cor- 
porations proposed or organized on a semi-coop- 
erative basis, and others. 

Among the movements still in a formative pe- 
riod but which will undoubtedly be perfected be- 
fore long is a National Fruit Marketing plan, to 
grow out of the work of the Committee of 21 ap- 
pointed early in the winter of 1921. 

This Committee of 21 was appointed under the 
same plan as the Committee of 17, the Committee 
of 15 and the Committee of 11, the first two of 
which have already proposed plans for the cooper- 
ative marketing of grain and live stock respec- 
tively, and the latter of which is now at work on a 
plan for national cooperative marketing of dairy 
products. 

The members of the Committee of 21 are the 
following authorities in the fruit growing and 

15 



226 The Modern Farm Cooperative Movement 

marketing business: W. B. Armstrong, Yakima, 
Washington; Sheridan W. Baker, Santa Eosa, 
California; C. L. Durst, Chicago, Illinois; W. F. 
Farnsworth, Waterville, Ohio; M. B. Goff, Stur- 
geon Bay, Wisconsin; Prof. Laurenz Green, La 
Fayette, Indiana; Charles E. Hardy, Hollis, New 
Hampshire; Orlanda Harrison, Berlin, Maryland; 
W. B. Hunter, Atlanta, Georgia ; E. A. Ikenberry, 
Independence, Missouri; A. E. Johnson, Grand 
Junction, Colorado; W. S. Keeline, Council 
Bluffs, Iowa; Clement B. Lewis, Salem, Oregon; 
B. F. Moomaw, Cloverdale, Virginia; N. E. Peet, 
Eochester, New York; E. B. Peeters, Devore 
Eanch, Devore, California; Gray Silver, Martins- 
burg, West Virginia; C. E. Stewart, Tampa, Flor- 
ida ; William H. Stites, Henderson, Kentucky, and 
Dr. 0. E. Winberg, Silverhill, Alabama. 

During December, 1921, the author had a talk 
with Mr. E. A. Ikenberry, of Independence, Mis- 
souri, a member of the Committee of 21, at his 
home concerning the proposed work of the Com- 
mittee and what was likely to be accomplished by 
it. The Committee had not, at that time, formu- 
lated any definite plan and Mr. Ikenberry did not, 
of course, divulge any information as directly 
coming from a member of the Committee concern- 
ing what it was doing. He did consent to discuss 



Other Federation Movements 227 

some of the general work which the Committee 
would, in the course of its deliberations, consider. 

*^We have had a fine spirit of cooperation 
shown us from all parts of the country,'' said Mr. 
Ikenberry. ^ ' Of course, I am not prepared or in a 
position to say just what we shall do, but some- 
thing good is sure to come out of the Committee 's 
work. The primary thing we are trying to do is 
to study fruit production and our sales field. 

**Many things will have to be corrected, and it 
is going to be hard to correct a number of them. 
One of these is orderly marketing. We all know, 
in our study of the cooperative marketing plan 
that the first thing to be done, as nearly as possi- 
ble, is to secure orderly marketing of the farmer's 
products in order to prevent market glutting and 
a consequent depression of prices immediately fol- 
lowing harvest. 

* * This is going to be mighty hard to accomplish 
in the fruit business. If one man were marketing 
all of the fruit, or the bulk of it, the v/hole thing 
could be worked out mathematically, but it will 
never be done, in my judgment, to the point a good 
many friends of the cooperative movement think 
it will be. But we can present the facts to the in- 
dividual and acquaint him of market situations 
which will tend to cause him to practice a more 
orderly marketing. We must have a service bu- 



228 The Modern Farm Cooperative Movement 

reau to give this information to the individual 
growers. 

**We must give attention to the transportation 
problem. Many abuses are practiced at the pres- 
ent time which we must correct or the fruit mar- 
keting business of this country will be seriously 
handicapped. A cooperative marketing plan 
should aid in solving these problems. 

^ ' The middle United States is interested in bet- 
ter standard of grades for fruit. It is rather un- 
fortunate at the present time that grades are 
based upon the idea of individuals rather than 
upon different standards recognized by all and 
applied in different parts of the country. I expect 
to see a standardization of grades come out of the 
Committee's efforts. 

^^ Another thing we need to do in the fruit line 
that will come out of the Committee 's work, is to 
stimulate a consumption of fruit. A good many 
people look on fruit as a luxury. As a matter of 
fact, it is an essential and is as economical to buy 
as anything we eat. We must bring this fact be- 
fore the public and I expect to see the Committee 
of 21 formulate a plan for national publicity to 
stimulate the consumption of all kinds of fruit. 

*^0f course, the margin between the price paid 
to the grower and the price paid by the consumer 
for fruit is too high. Cooperative marketing will 



other Federation Movements 229 

bring these two prices closer together, as it has 
done in other instances ; it will increase the price 
received by the grower and not raise the price 
paid by the consumer. 

^^ We need to establish fruit packing houses here 
in the Middle West. They are strong in the East 
as well as in the West. When the plan is finally 
presented and all of the things have been done for 
the fruit growing business which I have indicated, 
I expect to see the Middle West become more im- 
portant than it has ever been in the fruit business. 

* ' The fact is we can raise just as good fruit here 
as they can raise in the fruit growing regions ; the 
people here in Missouri are coming to learn that 
the Missouri apple has a better flavor than the 
apple grown in the Northwest. A national co- 
operative fruit marketing plan will stimulate the 
production of more fruit in the Middle West be- 
cause it will create a better market demand, better 
methods of marketing, will acquaint the producers 
here with what the market requires, and will gen- 
erally elevate the whole industry. ' ' 

Another major cooperative movement which 
has demonstrated its power to accomplish things 
for the shipper has been the various wool pools 
organized in the respective states where any con- 
siderable amount of wool is produced. We are 



230 The Modern Farm Cooperative Movement 



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other Federation Movements 231 

giving a table herewith which shows the results 
accomplished by the total wool pools during 1921. 

It will be noticed that the pools secured for the 
farmers more than $1,000,000 more than they 
were offered by their local wool buyers for their 
clip during the year. And the fact should be kept 
in mind that since the 1921 clip was sold prices 
have increased more than 50 per cent for wool ; in 
other words, the bulk of the wool here listed was 
sold during the low ebb of wool prices. 

Most of the states have wool growers' associa- 
tions which handle the wool clip, consigning it to a 
warehouse maintained at some central market, 
where it is later sold direct to buyers for mills. 
The pooling plan is used and the farmer is paid 
for his wool when the entire grade has been sold, 
at the average price received for the grade. 

This has caused some fretfulness on the part of 
the farmers who have had to wait for their money 
and has doubtless caused a good many to abandon 
the pooling scheme, but the increased price re- 
ceived as a result of the pooling is bound to win 
many back again. The strength of the movement 
will be recognized when it is taken into considera- 
tion that the pools handled 10 per cent of the na- 
tion's wool clip, even in the face of ruinously low 
wool prices at the start of the pool year and the 
dissatisfaction aroused by private dealers over 



232 The Modern Farm Cooperative Movement 

the results in the previous year. The success of 
the wool pool movement seems to be secure enough 
to warrant that it will steadily gain strength and 
influence on the market in the future. 

Other cooperative projects being formed or in 
operation in various parts of the country range 
from a maple sugar organization in Vermont to a 
rice growers' federation in Arkansas. A recent 
news dispatch from Little Rock, Arkansas, char- 
acterizes the rice growers* project in the follow- 
ing words : 

Approval by the War Finance Corporation of a loan of 
$1,000,000 to the Arkansas Rice Growers' Cooperative Asso- 
ciation, marks the beginning of the biggest cooperative mar- 
keting scheme Arkansas has ever known. 

With the money thus made available, the local organization 
members will take their crops from the rice fields through the 
mills to market and thus will totally eliminate the middleman. 
About 650 rice growers are members of the organization and 
they have on hand between 650,000 and 700,000 barrels of 
rice to be handled in this manner. The organization is growing 
rapidly. 

Officers of the organization are: B. E. Chaney, Stuttgart, 
President; Charles G. Miller, Lonoke, Vice-President, and 
H. C. Stump, of Stuttgart, Secretary. Mr. Stump Monday 
reported that the officers have not yet arranged their program, 
but that the association plans to lease two or three rice mills 
and mill the products grown by its members. The association 
also will take the rice to market and offer it in wholesale quan- 
tities, thereby securing the best prices. The money loaned by 



other Federation Movements 233 

the War Finance Corporation will make it possible to export 
this rice. 

The Arkansas Rice Growers' Cooperative Association has 
been selling rice grown by its members to the various mills. 
By leasing mills it will be possible to carry its own rice through 
the mills to the distributors ready for the table. Mr. Stump 
said the association would be ready to announce a definite 
program in a few days. 

It is probable that advances will be made to banks in Ar- 
kansas in a few days by the local committee representing the 
War Finance Corporation, of which John M. Davis, President 
of the Exchange National Bank, is chairman. 

The origin, purpose and progress of the Farm- 
ers' Union, another strong federation of cooper- 
ative business exchanges owned and controlled by 
farmers in various states, is set out in the follow- 
ing account published by the Iowa Farmers Union 
Exchange, and written by Mr. D. R. Ellis : 

The Farmers' Union was started by Newton Gresham in 
Texas, in 1902. Mr. Gresham was a farmer living on a rented 
farm. Practically all the farmers of the South were struggling 
under a heavy debt — rates of interest were high and commis- 
sions were large. Cotton was the one and the only money crop 
produced. The speculators furnished the capital to grow the 
crop and when the crop was harvested bought it at their own 
price. 

Mr. Gresham had long felt the grind of the mortgage sys- 
tem and realized the deplorable condition of the farmer but he 
knew that the farmer was helpless to change this system or 
better his conditions struggling alone, unorganized against the 



234 The Modern Farm Cooperative Movement 

organized speculators who controlled the money that the 
farmer must have to grow his crop and who priced the crop 
after it was grown. 

These were some of the conditions that caused Mr. Gresham 
to call a meeting at the Smyrna schoolhouse in Rains county, 
Texas, on September 2, 1902, where nine of his neighbors met 
him and helped to lay the foundation for the greatest organi- 
zation made up entirely of farmers the world has ever known. 

The principle on which the organization was founded is 
very simple. Mr. Gresham believed that by joining forces with 
his neighbors they could accomplish things that were impossi- 
ble when each worked alone. He felt that the farmer had 
problems in which only the farmer was or could be interested; 
peculiar problems which no one else could solve ; problems that 
could be solved only through organization and cooperation of 
the farmers. These were the premises on which Mr. Gresham 
based his organization and time has proved his conclusions 
were sound. 

From this small beginning the organization gradually 
spread to other parts of Texas, from there to other states, until 
today twenty-seven states have passed the 5,000 membership 
mark and have been chartered as organized states. 

The organization is made up of the national, state, the 
county and the local organizations. The local is made up of 
fifteen or more male members. To organize a county requires 
five or more locals, and a state must have 5,000 or more mem- 
bers to secure a charter. The national organization is made up 
of the organized states, each organized state being represented 
at the national convention by one delegate for each 5,000 mem- 
bers or major fraction thereof. Thus the chain is made com- 
plete from the individual farmer to the national organization. 

The organization being of Southern origin it naturally fol- 
lows that the Southern state was the first to come in line. So 



other Federation Movements 235 

it was not until 1915 that the organization work was started 
in Iowa by Mr. 0. F. Dornblaser of Texas, who was a member 
of the National Board of Directors. Monona Local No. 1 in 
Monona county, was the first local and was organized by Mr. 
Blair and Mr. Kepler, of Antelope county, Nebraska, working 
under the direction of Mr. Dornblaser, January 17, 1915. 

The organization grew rather slowly at first; people like to 
be shown when it comes to going into a new organization, espe- 
cially so when the main example of results sighted to recom- 
mend it were as far away as the state of Texas. But Mr. 
Dornblaser was persistent, as all successful organizers must be, 
and in spite of the doubting Thomases and those who were in 
sympathy, but who wished to wait and see how it would come 
out, he went ahead and organized until in the fall of 1917 it 
was found that this state had the required number of members 
for a state organization. 

So on the 5th of October, 1917, a convention was called at 
Des Moines and a state organization was perfected. 

The organization in Iowa has grown very rapidly since the 
state was organized and in less than four years from the time 
the first local was started in the state more than 13,000 farm- 
ers have enrolled. Women and young men above sixteen years 
of age also belong so that the 13,000 members in the state may 
really be taken as representing practically that many families. 

The purposes of the organization are best told in the pre- 
amble and purposes as given in the constitution and by-laws. 

In order to obtain a better and more direct market for all 
products of the farm and to eliminate unnecessary expense in 
buying our supplies, we have organized the Farmers Educa- 
tional and Cooperative Union of America, Iowa Division. 

To secure equity, establish justice and apply the golden rule. 

To discourage the credit and mortgage system. 



236 The Modern Farm Cooperative Movement 

To buy and sell and assist our fellow members in buying 
and selling. 

To educate the agricultural classes in scientific farming. 

To teach the farmer the classification of crops, domestic 
economy, and the process of marketing. 

To systematize methods of production and distribution. 

To eliminate gambling in farm products by boards of trade 
and other speculators. 

To bring farming up to the standard of other industries and 
business enterprises. 

To secure and maintain uniform prices for grain, live stock, 
and other products of the farm. 

The Farmers' Union is primarily the farmers' business or- 
ganization. It seeks first through education, organization and 
cooperation to assist in solving some of the farm problems in 
which those not directly interested in farming are not and can- 
not be interested. One of the first things in this line is the 
marketing of farm crops. The Farmers' Union is interested 
in seeing as large a portion as possible of the price paid by 
the consumer for farm products reach the pockets of the pro- 
ducers. 

To assist in this work the organization has been instrumen- 
tal in establishing cooperative elevators and shipping associa- 
tions in Iowa. These elevators and associations are organized 
on the true cooperative plan. Interest not to exceed a fixed 
rate is paid on the capital invested, a sinking fund is set aside 
to meet unexpected losses and the balance of the profits are 
returned to all Union members who patronize the business, 
according to the amount of their patronage. 

By this plan each Union member who patronizes a Union 
cooperative elevator receives terminal market prices for his 
grain less the actual handling expenses. 



other Federation Movements 237 

To eliminate unnecessary expense between producer and 
consumer not only applies in case of the products produced on 
the farm, bi^t the farmer is equally affected by unnecessary 
middlemen, who le\'y tolls on goods between the factory and 
the farm. To eliminate this waste the Farmers' Union pro- 
motes the idea of cooperative buying. The members now own 
and successfully operate a number of cooperative stores and 
buying associations. These operate on the same true cooper- 
ative plan as the elevators. Interest is paid on the money in- 
vested and trade dividends are returned to each Union member 
according to the amount of goods bought from or sold to the 
store. This plan enables Union members to buy their supplies 
at wholesale plus the actual distributing cost. 

The Farmers' Union has gone further and perfected a buy- 
ing organization for the systematic distribution of things used 
on the farm direct from the factory and producer to the Union 
members. This system is known as the Baker plan. 

The Iowa Farmers' Union Exchange which is located at Des 
Moines, constitutes the buying head with local branches for the 
distribution of goods in towns over the state where the mem- 
bers are sufficiently organized and wish to maintain a branch. 

The State Exchange places contracts direct with the fac- 
tories and producer and by contracting for large amounts of 
goods, are able to get the lowest price possible. These goods 
are supplied to the Branch Exchange at actual buying cost and 
are sold by the Branch Exchange at about the same price as 
other retail stores in the town charge. At the end of the year 
if it is found that the Branch Exchange has made any profit 
after paying the members interest on the money which they 
have invested in the Exchange and setting aside a small amount 
to provide for any unexpected loss, the balance of the profit 
is returned to the Union members who patronize the business 
according to the amount of business done. 



238 The Modern Farm Cooperative Movement 

Where members do not have a Branch Exchange or prefer 
to deal direct with the State Exchange goods are supplied from 
the State Exchange. If at the end of the year profits are made 
on this business after paying interest and providing for the 
sinking fund this is returned to the Union members who bought 
goods direct from the State Exchange according to the amount 
of business they have done. On this plan each Union member 
who patronizes the State Exchange or the Branch buys goods 
at the factory cost plus just what it costs to distribute the 
goods through the department that he has patronized. He 
pays only for the service and accommodation which he gets. 
By this plan all of the buying is handled by the State Ex- 
change. There are no traveling men. The accounts are all 
kept by the State Exchange whose books are audited from time 
to time by a public accountant. 

The big advantage of the Baker plan over that of individual 
local stores is the increased buying power that it gives. Where 
the State Exchange is able to place a contract for goods to 
supply several thousand members they are able to go direct to 
the factory and to get the same price that the factory would 
ordinarily make to jobbers who handle goods in large quanti- 
ties. Where the local store supplies goods to perhaps 100 cus- 
tomers and buys in medium size quantities it is forced to buy 
from traveling salesmen and wholesalers and consequently 
must pay their expense and their profits. In addition to the 
large buying power which the Baker plan gives the organiza- 
tion it establishes a uniform system of bookkeeping and audit- 
ing. The manager of the Branch Exchange does not know 
what day an auditor may call on him to check over his ac- 
counts. In addition to this each Branch Manager is required 
to make daily reports to the home office. It also establishes co- 
operation among the different exchanges and a uniform method 



Othet^ Federation Movements 239 

of handling the business. It works along the same plan as the 
chain stores which have been so highly successful. 

The Iowa Farmers' Union Exchange has been in operation 
since January 1, 1919, and during the first six months or pe- 
riod just closed the business has grown very rapidly. The first 
four months the business doubled each month over that of the 
previous month. During the months of June and July the 
business run $100,000 per month. In the neighborhood of 
800,000 pounds of binder twine was sold to Union members. 
It is difficult to estimate the saving which the Exchange made 
to the members on this twine as it is difficult to determine just 
what the price of twine would have been had the Farmers' 
Union not handled it. In some places in the state twine was 
quoted at 27 cents per pound, and when the Union shipped in 
twine the price at local dealers dropped to 23 cents per pound. 
In this case those outside the organization were saved at least 
four cents per pound on their twine, while those in the or- 
ganization saved five or five and one-half cents per pound. 

The State Exchange handles the state agency on the Madi- 
son or Old Fuller and Johnson line of tillage machinery. These 
goods are bought direct from the factory and are supplied di- 
rect to the Union members. A 13-inch gang plow which the 
retail dealer charges from $120 to $130 this year was sold by 
the Exchange for $96.30 or a saving of from 20 to 30 per cent. 
It is difficult to estimate the exact saving in doUars or in per 
cent as this varies in different communities according to the 
competition which the local dealers may have, but the saving 
on all lines including machinery, groceries and clothing is 
large, and will increase, as the volume of business which the 
Exchange handles increases; the maximum saving can only be 
made when the Union is in position to contract for the entire 
output of a factory. 



240 The Modern Farm Cooperative Movement 

One of the deplorable conditions which is fast becoming 
more apparent, is the lack of sociability among the farmers. 
Each farmer is independent of his neighbor and in many cases 
he may scarcely know neighbors who live only a few miles 
away. This especially is true of renters who move from one 
neighborhood to another almost every year. The Farmers' 
Union is changing this condition. 

The local union is the rural social unit. It furnishes the 
machinery by which the rural social gatherings are promoted 
and conducted. The various locals have local entertainments in 
their school houses, churches and halls. These are in the form 
of musical programs, recitations and readings, ice cream so- 
cials, debates and public speaking. These meetings are edu- 
cational as well as entertaining and tend to build up Iowa 
Community spirit. In the 350 locals in Iowa just such meet- 
ings as these are held every two weeks. 

Then there are the Union picnics. More Union picnics have 
been held this year than ever before. Through the Farmers' 
Union the farmers are working out their own social problems. 
These gatherings furnish the much needed entertainment for 
the country young folk without the undesirable features which 
very often are found when the young people are compelled to 
go to the town and cities for their entertainment. 

The Farmers' Union is working constantly for improvement 
in the rural educational system. It is working for consolidated 
schools and high schools, and short term schools where the 
country boy and girl may be taught those things which will 
help to fit them for their life work on the farm. 

The state organization has a number of organizers, speakers 
and lecturers which it sends out to assist in forming new local 
organizations. These are men who from their wide experience 
in cooperative business concerns are especially fitted to assist 



Other Federation Movements 241 

in the formation of business associations. There are also a 
number of men who have had wide experience in rural educa- 
tional work. These are sent out without additional cost to 
assist the members in improving their schools. 

Though the organization is strictly non-partisan and does 
not indorse any political party or candidate, yet it is very 
much interested in good government. To aid in this work a 
legislative committee is maintained, its duty being to work for 
the principle of the legislative program as adopted by the 
state convention each year. 

By organizing and cooperating farmers who have long been 
the joke and stock-iu-trade of smooth politicians, are able to 
make themselves felt even in legislative halls. 

Only actual farmers are admitted. Women and minors are 
admitted free. 

To form a local requires fifteen or more male members, al- 
though eight members may secure a charter by paying the 
membership fee for fifteen. A membership fee of $2 is 
charged each member. After the first fifteen or charter mem- 
bers join, half of the fee remains in the local treasury. 

The yearly dues are $3 per member. Of this $1.20 remains 
in the local treasury and $1.80 goes to the state treasury. 

National dues, sixteen cents. 

Iowa Union Farmer, which goes to each paid member, 65 
cents. 

For general expense, 99 cents. 

Out of the 99 cents for general expense is paid the office 
rent, telephone and telegraph fees, salaries of organizer, sec- 
retary-treasurer, and per diem expenses of the president, 
board of directors, executive committee, legislative committee 
and other committee meetings, supplies for locals, postage and 
all other incidental expenses. 
16 



242 The Modern Farm Cooperative Movement 

After this is all paid there is still a nice amount in the 
treasury which can be used for any purpose seen fit by the 
Union. A nice amount was invested by the Board of Directors 
in Liberty bonds. 



PART IV 

THE EUTURE 



CHAPTER NEXETEEN 

Political Aspects 

There has been much concern in certain quar- 
ters over the political aspects of the farm cooper- 
ative movement ; concern to the professional poli- 
tician and to those invisible interests popularly 
described as being behind the political scenery of 
the nation quietly manipulating things to their 
own advantage. 

Those who have trifled with the farmer in the 
past; those who have made easy promises to him 
which were as easily forgotten after the votes 
were counted and the election was over, have 
every reason to be concerned. The American 
farmer is a great cross-section of that type of na- 
tional citizenship described by Lincoln when he 
said: ^*You can fool all the people some of the 
time, and some of the people all of the time, but 
you cannot fool all of the people all of the time ! ' ' 

The American farmer, particularly the Corn 
Belt farmer, has been frequently fooled in the 
past, so far as politics are concerned; at other 
times he has been deliberately sold out by men 
whom he had come to trust through long years of 
association and confidence. He is rapidly coming 



246 The Modern Farm Cooperative Movement 

to the parting of the ways, politically, and this 
conviction and determination in him has been born 
largely as a result of the farm cooperative move- 
ment. 

It is but natural that some such conviction 
should inevitably grow out of a great movement 
such as the farm cooperative movement. The 
unity of action first secured through the farm co- 
operative movement along an economic line was 
certain to suggest to the farmer that if unity and 
common purpose would accomplish results to his 
betterment economically, a unity of action po- 
litically might undo some of the political wrongs 
which had been inflicted upon him in the past 
through either his own misfeasance or non- 
feasance. 

An adventure into the business world success- 
fully undertaken through the sole medium of com- 
mon purpose was bound to give the farmer an in- 
sight into practical politics ; indeed, the mere as- 
sociation together of large numbers of farmers in 
organizations and clubs was bound to arouse an 
interest in and a practice in practical politics. 
The inevitable result of a strong class organiza- 
tion or trade or craft organization, is to give the 
leaders of those organizations, if not the mem- 
bers, a strong class consciousness. 



Political Aspects 247 

The American farmer, if he continues to strike 
out along the cooperative pathway in the future, 
is going to become more and more class conscious. 
This is natural and entirely proper. It is the his- 
tory of social movements in this and other ages 
that no class has ever achieved any substantial 
position in civilization that did not have this con- 
sciousness of itself and its mission in life. 

We do not subscribe to the concern expressed by 
many politicians and business interests that there 
is something to fear in the class consciousness of 
the American farmer. In the first place, we are 
willing to take into account the caliber of citizen 
the farmer is ; we have learned from innumerable 
instances in the past that he is a thorough-going 
American and as deeply rooted, if not more deeply 
rooted, in the principles of American institutions 
than any other member of other classes or sta- 
tions of life. The defenders of the embattled 
liberties of mankind have ever been the farmers, 
the tillers of the soil, and this holds true from 
Cincinnatus on down to the present hour. 

Then, again, the American farmer is asking 
nothing that should not have been accorded him 
long ago. He is not unfair ; all he asks is a square 
deal. Never in the history of the world has a 
^* class'' been so fair in its attitude as the farmers 
have been in their attitude, politically at least, 



248 The Modern Farm Cooperative Movement 

and the demands they have made for relief at the 
hands of the legislative authority of this nation. 
It is seldom indeed that a class has made a re- 
quest which was tempered in advance with a com- 
mon desire to seek nothing that would not reflect 
to the benefit and prosperity of the entire nation. 

President J. E. Howard of the American Farm 
Bureau Federation, one of the important farm or- 
ganization movements, made the following state- 
ment in a speech at St. Paul, Minnesota, on Janu- 
ary 3, 1922 : 

*^Much has been said of late regarding class 
legislation and the development of class con- 
sciousness. No organization has been more pro- 
nounced in opposition to either than has been the 
American Farm Bureau Federation. Repeatedly 
we have said that there is but one interest in this 
country and that is the interest of the whole Amer- 
ican people. Time and again we have asserted 
our interest in and our dependence upon trans- 
portation lines and facilities, manufacturing es- 
tablishments, distributive institutions, as well as 
the American laborer and the consumer in gen- 
eral. We have called the attention of all classes 
of our citizenry to the fact that no one of us can 
permanently prosper without all of the others 
also prospering. We have endeavored constantly 
to look across our own line fences and to studv the 



Political Aspects 249 

other man^s problems. I want to assert plainly 
that the American Farm Bureau Federation has 
not knowingly or wittingly, and never shall, ad- 
vocate any policy which is not for the well-being 
of all our various interests. 

* ' The farmer, with the dweller in the small town 
whose interest is rural rather than industrial, con- 
stitutes, according to census reports, practically 
one-half of our population. He produces that 
which sustains the entire population. He is not 
now nor never has been a hoarder of this world's 
goods. The money which he receives for his 
crops does not go into tin cans to be buried in the 
back yard. It goes directly into the channels of 
trade for the payment of labor and necessaries of 
life, for interest and for the maintenance of our 
public institutions. 

**The farmer's income creates the bank bal- 
ances of the nation. If his prosperity were dou- 
bled or trebled, the prosperity of industry and 
commerce and transportation would be likewise 
enhanced. The fact is self-evident. Every think- 
ing man admits it. How, then, under heaven, can 
that which would help bring prosperity to the 
whole people of the nation through the building 
up of the prosperity of our basic producers, be 
termed class legislation? Is the farmer to con- 
tinue to develop improper standards of living! 



250 The Modern Farm Cooperative Movement 

Is lie to educate Ms children and continue to send 
a part of the brightest into the cities to become 
leaders of commerce and finance! Is his pur- 
chasing market to be of continuing importance in 
the trade channels of the world I Or is he to be 
reduced to serfdom and peasantry? 

^* These are the questions which underlie any 
discussion of the farmer's class legislation or de- 
velopment of class consciousness. These are the 
questions vital to the perpetuity of our democ- 
racy. The agricultural bloc, then, in advocating 
such a program is not a menace. It is a national 
asset. If it seemingly runs counter to established 
thoughts and established customs, it should not be 
condemned unless those new things which it advo- 
cates can be proven to be detrimental to public 
welfare. If it serves, in this crisis, as I believe it 
does, the well being of the vast majority of Amer- 
icans, it should be hailed as a land-mark in na- 
tional progress. '^ 

The farm cooperative movement is certain to 
immeasurably increase the political power of the 
American farmer. Not that the movement will 
go off on a tangent in the form of the organization 
of a Farmers' Party or a distinct political move- 
ment organized as such, as the farmer has learned 
the folly of such a program in his earlier experi- 
ences along this line. The Populist and other 



Political Aspects 251 

political party movements have taught the farmer 
that there is no large result to be attained in such 
efforts. It is not through partisan movements 
that the fullest strength of class efforts is at- 
tained. 

The farm cooperative movement has admittedly 
performed one valuable service for the farmer 
and that has been to acquaint him of the advan- 
tage of community effort; it has tended to wipe 
out old lines of cleavage and to impress upon him 
the disadvantage of his old tendencies toward in- 
dividual thought and action. It has taught him 
the marked advantage, on the other hand, of com- 
mon effort and unison for the things which will 
improve and secure his economic and political 
standing in the community. Naturally, this has 
taught him that old lines of cleavage and party 
fealty are not as important as the results to be at- 
tained by the new allegiances. 

In other words, as the economic problems have 
been solved or found capable of solution through 
common effort and purpose, it is inevitable that 
he should be deprived, eventually, of his party 
fealty and partisanship as political redress is 
necessary, as he was deprived of his individualis- 
tic tendencies in order to secure economic sur- 
cease. 



252 The Modern Farm Cooperative Movement 

The agricultural bloc movement in the Congress 
of the United States is but a confirmation of this 
thought. These gentlemen in Congress have 
recognized the growing political consciousness of 
the American farmer arising out of his coopera- 
tion in economic lines, and have merely antic- 
ipated what he was bound to secure eventually 
through the orderly working out of the forces set 
in motion. 

Much has been said and written about the agri- 
cultural bloc. But whatever its critics have 
thought or said about it, the fact remains that it 
has come to be the accredited representative in 
the national Congress of the farmer in his newer 
consciousness of political power. How long it 
will continue to be his accredited representative 
depends upon its faithfulness in standing for his 
purposes and ideals of common justice. The mo- 
ment it ceases to interpret these ideals, that mo- 
ment will it cease to be of interest to the farmer, 
and properly so. 

Some dispute has arisen over the manner in 
which the bloc was originally organized. Certain 
farm organizations have resorted to petty squab- 
bling among themselves seeking to secure credit 
for its organization. Whatever the facts may be, 
it seems beyond contravention that the original 
idea arose in the minds of certain members of 



Political Aspects 253 

Congress, among them being Senator LaFollette 
of Wisconsin and Senator William S. Kenyon of 
Iowa — the latter having been selected as the first 
leader of the bloc, but who has since resigned to 
become a member of the Federal Circuit Court. 

The membership of the agricultural bloc in both 
houses and the particular work to which they 
were assigned, is as follows : 

In the Senate 
Federal Reserve Act : 

Ellison D. Smith, South Carolina. 
Frank D. Gooding, Idaho. 
John B. Kendrick, Wyoming. 

Transportation : 
Eobert M. LaFollette, Wisconsin. 
Duncan U. Fletcher, Florida. 
Morris Sheppard, Texas. 

Adequate Warehousing and Storage : 
Geo. W. Norris, Nebraska. 
Joseph E. Eansdell, Louisiana. 
Arthur Capper, Kansas. 

General Agricultural Measures : 
E. F. Ladd, North Dakota. 
J. Thomas Heflin, Alabama. 
William S. Kenyon, Iowa.* 



Resigned. 



254 The Modern Farm Cooperative Movement 

Other Members of the Senate Bloc : 
Charles L. McNary, Oregon. 
Peter Norbeek, South Dakota. 
John W. Harreld, Oklahoma. 
Andrieus A. Jones, New Mexico. 
William J. Harris, Georgia. 
Henry F. Ashurst, Arizona. 
Nathaniel B. Dial, South Carolina. 

In the House 
Transportation : 
Homer Hock, Kansas. 
Fred B. Genard, Pennsylvania. 
John W. Summers, Washington. 
John H. Smithwick, Florida. 
Philip B. Swing, California. 
L. J. Dickinson, Iowa. 

Taxation and Revenue: 

Edward T. Taylor, Colorado. 
William Williamson, South Dakota. 
0. B. Burtness, North Dakota. 
Edwin B. Brooks, Illinois. 
William C. Linkford, Georgia. 

Tariff: 

C. B. Hydspeth, Texas. 
Robert E. Evans, Nebraska. 
Richard N. Elliott, Indiana. 



Political Aspects 255 

John D. Clarke, New York. 
F. B. Swank, Oklahoma. 

Miscellaneous : 

Burton L. French, Idaho. 

Chas. A. Christopherson, South Dakota. 

John C. Ketcham, Michigan. 

Eoscoe C. Patterson, Missouri. 

Ladisla Lazare, Louisiana. 

Chas. I. Faust, Missouri. 

Financial : 

A. P. Nelson, Wisconsin. 
Frank Clague, Minnesota. 
James G. Strong, Kansas. 
James H. Sinclair, North Dakota. 
Guy L. Shaw, Illinois. 
Henry B. Steagall, Alabama. 

The membership of the bloc is constantly being 
increased, as the members of Congress discover 
its popularity back home and a desire to get on 
the **band wagon ^' manifests itself. 

The bloc has demonstrated a power to accom- 
plish results and has been a constant source of 
worry and chagrin to party leaders on both sides. 
In the main, they have had to submit gracefully 
and pass legislation which, in some instances, the 
farmer has attempted in vain to pass after dec- 
ades of effort. 



256 The Modern Farm Cooperative Movement 

The future political aspects of the farm cooper- 
ative movement cannot be anticipated. It seems 
certain that whatever the need of the hour, the 
farmer will be in an increasingly important stra- 
tegic position to secure such legislation and other 
political consideration as may be necessary. 

The American farmer has held the balance of 
power in politics all these years, but it was an un- 
conscious power. He is beginning to realize that 
fact today and he has commenced to assert his 
birthright. But he has been fair in his demands ; 
he wants nothing that will not reflect to the bene- 
fit and prosperity and well-being of the whole 
American people. He has demonstrated that in 
the demands he has made in the past year. 

We welcome the entry of the farmer into prac- 
tical politics. We believe he can do much to 
elevate the standards of American politics and 
purge it of elements now antagonistic to the best 
interests of the American people. He can at least 
set the current running in that direction, if he 
will. 



CHAPTER TWENTY 

The Cooperative State 

The bare snatches we have given the reader 
of the farm cooperative movement have been un- 
avoidable. It is to be regretted that lack of space 
makes it impossible to enumerate each coopera- 
tive organization, and in detail. But the very 
magnitude of such a task from the reader 's stand- 
point alone would discourage all attempt to under- 
stand the situation. 

The snatches we have been able to bring to the 
reader's attention will serve the same purpose 
and in a more useful manner, if they have not ob- 
scured the reader's mind to the movement as a 
whole; if they have not failed to arouse in his 
mind speculation as to the kind of a civilization 
awaiting a state or a people thoroughly organized 
under the cooperative principle. 

Is such a day likely ever to come upon us? 

It cannot be said. It is not unlikely — and there 
is a big IF — . If we do, at some stage in our 
progress, enter into a pure cooperative state, 
where the farmers and producers of our raw ma- 
terials and more crudely manufactured products 
coming from the soil, succeed in taking over the 

17 



258 The Modern Farm Cooperative Movement 

marketing and distributing of their products, we 
do not believe it shall be such a terrible condition 
of affairs, after all. 

Many people look forward to that condition of 
affairs in much the same spirit that they look back 
upon a nightmare. They shudder over some im- 
aginary ghost which rises up before their eyes. 
In the case of the farm cooperative movement, the 
particular ghost is the old familiar goblin of 
* ^ Socialism. " 

It is ever popular to decry all new and reform 
movements by calling them socialistic. If a man 
proposes a new plan for handling a certain indus- 
try, those most likely to be bumped on the shins 
by the plan, immediately make the welkin ring 
with their cries of ** socialism!^' and set the think- 
ing standards of the masses by such prompt and 
early christening of the movement. 

The farm cooperative movement has not es- 
caped this same sort of doubtful compliment. 
Never has an attempt been made in this country to 
discredit a simple business movement on the part 
of a certain class of business men that has been 
made in the case of the farmers. They have hardly 
gotten their heads together for a social club but 
that certain ** interests^' have been terribly exer- 
cised over the ** threat'^ contained in the move- 
ment. 



The Cooperative State 259 

If a few members of Congress, after decades of 
legislating for the benefit of this, that and every 
other class of business interest in the land, decide 
to do something to help the farmer — instantly the 
hue and cry is raised and even the President of 
the United States is moved to say something about 
the dangers of ^^ class" legislation! 

We are not attempting to hold a brief for any 
particular movement the farmers have started the 
past few years of a political or social nature. We 
are not primarily interested in farmer organiza- 
tions in this book ; we are speaking solely from the 
standpoint of the farmer-owned and controlled 
business organizations, which are entirely distinct 
and apart from the great bureaus, unions, and 
clubs which have been started. 

To say that the farm cooperative movement is 
socialistic in principle is merely to reveal the 
ignorance of the accuser both of socialism and of 
cooperation. There is no more persistent foe of 
socialism in all the land than the American farm- 
er ; and there is no more substantial citizen, in all 
the cross winds of political hurricanes that harass 
the land, than the farmer. He has never been 
stampeded away from the institutions of the 
fathers ; he will be the last to take up the firebrand 
and join the mob. 



260 The Modern Farm Cooperative Movement 

The reasons for his opposition to the doctrines 
of easy wealth are not hard to discover. In the 
first place, the farmer is out in the clear air and 
under the open skies where the opportunity is 
present for clear thinking ; in the second place, he 
toils for the wealth he secures and he knows the 
value, in sweat and backaches, of every dollar that 
flows into his ken ; in the third place, he is a prop- 
erty owner, and he stands for the protection and 
the preservation of the existing order; in the 
fourth place, he has intelligence, a fact it would 
hardly seem necessary to enumerate. 

Though he may be patient and long-suffering, 
he will not stolidly stand for exploitation and 
^^farming'' at the hands of others. While he 
stands for the integrity and preservation of our 
institutions, he does not mean to say that they 
should go on unchanged from generation to gen- 
eration, where experience demonstrates to him 
that changes are necessary. He will change, but 
to accomplish his changes he will not seize the 
firebrand or pull down the existing order in a 
chance that he may find the particular brick seem- 
ing desirable in his new structure. 

Socialism has for its central thought the owner- 
ship of all property and wealth in common. It 
holds that all new wealth created should be divided 
equally among the citizens of the socialistic state 



The Cooperative State 261 

or held for the common good of all. The chief ob- 
jection we all have to socialism and anything that 
savors of it is that fact that it would reduce every- 
one, so far as property is concerned, to a common 
level ; it would destroy to a large degree ambition 
and individual initiative because it would deprive 
a man of his incentive to toil. 

Whether this is a technical definition of social- 
ism or not, it is the popular conception of the term 
and to charge that the farm cooperative move- 
ment is ^^socialistic" is to infer that it would 
either directly or indirectly accomplish these 
things. Such is not the case, for reasons which 
can be manifestly made clear. 

In the first place, there is absolutely no differ- 
ence between a farm cooperative business associa- 
tion and an ordinary private corporation for pe- 
cuniary profit, so far as the legal entity is con- 
cerned, except the manner in which the profits or 
earnings are distributed. In the case of the pri- 
vate corporation, you have an organization made 
up of thousands, even tens of thousands, of stock- 
holders, who put their money into the institution 
and share in the profits. Here you have a cooper- 
ation in capital, and a share in the earnings in pro- 
portion to the amount of capital invested. If 
there is anything '* socialistic'' about this, it has 
never been agitated. 



262 The Modern Farm Cooperative Movement 

In the case of the farm cooperative association, 
you have a number of people interested in farm- 
ing coming together for the purpose of marketing 
their products to better advantage, in much the 
same manner that private investors enter a cor- 
poration in order to better the earning power of 
their capital. These farmers and producers not 
only agree to cooperate in their capital by taking 
stock in their concern, as the stockholders in the 
private corporation do, but they further agree to 
cooperate in bringing their business to their own 
association. Indeed, some of them may furnish all 
of the capital necessary to transact the business 
and only a small part of the patronage, while 
others furnish little capital and a large part of the 
patronage. Do the stockholders receive the lion's 
share of the earnings or savings, as in the case of 
the private corporation? They do not. They are 
paid a fair return for the use of their money, 
usually five or six per cent, and that ends the mat- 
ter so far as they are concerned. 

The bulk of the earnings go to the patrons of 
the association, those who have furnished the vol- 
ume of business regardless of capital invested, 
and these earnings are prorated according to the 
amount of business furnished! The only differ- 
ence between these two forms of legal entities is a 
difference in name and a difference in the dis- 



The Cooperative State 263 

tribution of earnings. One is no more socialistic 
than the other. 

If the farmers all cooperate together and mar- 
ket their live stock, does this constitute the social- 
ization of the live stock industry? Hardly, be- 
cause the man raising the best live stock in the 
greatest numbers continues to receive the most 
in the way of money paid him by the association ; 
in other words, there is no attempt to divide the 
returns equally without reference to what was put 
in. In this way individuality and individual in- 
itiative is preserved as before. There is no differ- 
ence between the old days when private buyers 
bought the stock and shipped it and now, save 
that the farmers have organized an association 
and hired a manager to do it for themselves, so 
far as the question of socialism is concerned. 

Will the ultimate development of the farm co- 
operative movement to the point where the farm- 
ers are thoroughly organized in every community 
and in every commodity group, serve to create a 
condition such as might result from a socialistic 
movement? This all depends upon *^ which foot 
the shoe is on.'' Lines are bound to be shortened 
and a great deal of the present economic slack in 
our system of marketing and distributing will be 
taken up. It will ** squeeze out'' some unneces- 
sary middlemen. It will not hurt the necessary 



264 The Modern Farm Cooperative Movement 

jobbers, retailers and others who are not dupli- 
cating effort in sending food products and raw 
materials from the farm to the consumer. It will, 
undoubtedly, remove much of the speculation now 
practiced in farm products of all kinds ; it will re- 
move the man engaged in a mere gainful occupa- 
tion and put him into a producing position. 

Eventually — again the Big If — if the farm co- 
operative movement continues to make the prog- 
ress it has made the past ten years, the next ten, 
we expect to see the movement seriously adopted 
on a nation-wide scale on the part of the con- 
sumers. Then we shall see the consumers work- 
ing along a common highway in an effort to meet 
the farmer and the producer; for cooperation 
holds out even greater promise to the consumer, 
in the visible results to be accomplished, than it 
ever held out to the farmer. But these are meas- 
ures for the future. 

The old criticism that cooperative effort cannot 
succeed for lack of management is fast becoming 
obsolete. Managers are being trained, and we 
have a number of farmer-managers of large co- 
operative associations who have demonstrated an 
ability to do business running as high as $50,000,- 
000 annually and do it in the face of constant odds, 
and at a profit. 



The Cooperative State 265 

Management is going to come; in fact, young 
men are being trained in the management of co- 
operative enterprises in our agricultural colleges 
at this moment. In the not distant future, it will 
be the life-long calling of numbers of men spe- 
cially trained in the work. 

It is the author's undying conviction that some 
sort of a cooperative state is coming. Present 
movements may be pulled down, but it is the his- 
tory of cooperation that the loss of one movement 
only strengthens and hastens the next. Present 
aspects may be materially changed, but in the end 
the ultimate result will be a cooperative state. 

When that state comes, we need have no fear 
about the integrity of the institutions we all up- 
hold. This is not a political movement; it is an 
economic movement. And the change will be 
made so gradually that millions of our population 
will never know it has been accomplished. There 
will be no tearing down or uprooting of existing 
agencies overnight; they will merely drop by the 
wayside one by one as they demonstrate their un- 
fitness to compete. 

And the cooperative state will be an efficient 
state. It will be a state founded upon thrift and 
upon economy, rather than upon the wastefulness 
that characterizes our life today. A better mar- 
keting system will result ; there will be a more in- 



266 The Modern Farm Cooperative Movement 

telligent and orderly distribution of food prod- 
ucts. 

Best of all, American agriculture will have been 
saved to perpetuate this great nation. We will 
not be reduced to the condition of a food-import- 
ing nation because of the break-down of our agri- 
culture. We will be a whole people and we will 
be a secure people. That will be the verdict of 
time concerning the farm cooperative movement. 
It will save the American farmer from annihila- 
tion under exploitation at home and cheap com- 
petition from abroad just as it saved the Danish 
farmer. 



CHAPTER TWENTY-ONE 

The Future of Cooperation 

A great many people are not nearly so greatly 
concerned over the present magnitude and effec- 
tiveness of the farm cooperative movement as 
they are over the probable proportions it is likely 
to assume in the future. This does not apply en- 
tirely to certain business interests which are find- 
ing themselves directly in the path along which 
the movement is developing. There are many 
farmers in the country who are lukewarm in their 
feeling toward the cooperative idea because they 
are suspicious of it, or because they lack faith in 
its strength, or are frankly waiting for the day 
when it becomes a giant in commerce when they 
will gladly embrace it and accept the benefits it 
has secured. All of these people are asking them- 
selves. What of the future? 

At the present time there are two views of the 
farm cooperative movement, two radically dif- 
ferent views. On the one hand we have a class 
of people who consider it a tempest in a teapot, 
which will ^^blow over" as soon as agricultural 
conditions better themselves and the farmer once 
more receives a good price for his products. These 



268 The Modern Farm Cooperative Movement 

people pin their faith upon the doubtful criterion 
of past performance. They have seen farmer or- 
ganizations blaze up into the dark sky of agricul- 
tural depression, glow for a brief moment, and 
then pass out as a dawn of economic readjust- 
ment came again. 

It is natural that they should look for the same 
thing to occur again. We do not pretend to say. 
But there is one fundamental error in comparing 
the present farm cooperative movement to prior 
farm organization movements. We have paid 
scant attention to the farm organizations in this 
volume for the reason that they do not appear to 
us to be nearly so vital and important as the co- 
operative movement, as applied to business in- 
stitutions. 

It is well-recognized that the chief causes of the 
recent agricultural depression were economic, 
rather than political or social. And the various 
farm organizations we now have or have had in 
the past have been essentially political and social 
in their purpose and aspect. It is true that many 
of the present farm cooperative business organ- 
izations have been fostered and launched by cer- 
tain of the farm organizations, but we feel that 
this merely lends emphasis to our contention. It 
has been because the leaders of these political and 
social organizations have recognized the .handi- 



The Future of Cooperation 269 

caps of a "cure-alP' organization, where every 
effort is coordinated into one organization, that 
they have adopted this plan of separate and inde- 
pendent effort in the respective fields. 

The farm cooperative business association is 
the child of the parent farm politico-social organ- 
ization, but the day is rapidly approaching when 
the child will be bigger and a source of more po- 
tential good or evil than the parent organization. 

Every great reform movement which the world 
has ever witnessed has been based upon some 
wrong or abuse. Many of the changes which have 
been wrought in the world's history could have 
been avoided had the causes been withdrawn or 
the abuses ended. And that has happened to many 
of the farm organization movements in the past. 
As soon as the cause was removed, and times 
got easier, the people forgot their high hopes and 
firm resolves and slipped back into the old order. 
This may, it is very true, occur so far as the farm 
organizations are concerned. Time alone can tell. 
But we consider it fundamental error to consider 
the farm cooperative business institutions fos- 
tered by these movements, in the same class. 

The farmer as a business man, or the producer 
of farm products as a processor and distributor of 
his products, is an entirely different individual 
from the farmer who joins political and social or- 



270 The Modern Farm Cooperative Movement 

ganizations so long as liis individual salvation de- 
mands it, and then lapses in his membership. As 
a business man, he has something tangible at 
stake. He has a cheese factory, a warehouse, a 
mill, an elevator or local stockyards, or a terminal 
elevator or commission house at the terminal mar- 
ket. His money is there and there will be his al- 
legiance. Besides, he has learned one damaging 
thing; namely, that he can do business under the 
cooperative principle more economically than the 
old system of private middlemen admitted to be 
possible. 

Once a man finds it profitable to transact a cer- 
tain business, he is not going to lightly surrender 
the privilege to continue to transact that business. 
He may not be so mightily moved as to his social 
club or his political group, but he is going to hang 
on to the business organization because there is 
profit in it. And it is because the beginnings we 
have already had in the cooperative movement, 
particularly in the local movement, have brought 
these things so vividly home to the producers that 
we would hesitate to brush the whole movement 
aside with an idle gesture. 

There is, on the other hand, another class of 
thinkers upon the farm cooperative movement. 
They consist of the thinking farmers, farm organ- 
ization leaders and agricultural economists. .They 



The Future of Cooperation 271 

feel that the farm cooperative movement marks 
the beginning of a new marketing order which will 
eventually revolutionize the wliole existing mar- 
keting and distributing facilities in the business 
world. They are not sure as to time or place. 
But they are reasonably certain as to the ultimate 
outcome. 

They believe that there has been a sufficient 
trial of the farm cooperative principle in business 
practice to demonstrate that it offers a new and 
effective tool with which the farmer can solve his 
economic problems, if he will. And they rely on 
the fact that ultimately he will become conscious 
of this fact and seize it and apply it to his advan- 
tage. For, while the farmer may be slow to move 
and slow to wrath, there is no denying the fact 
that he has the power to bring about the greatest 
industrial revolution the world ever saw. Repre- 
senting more than 40 per cent of our population, 
he is at once the most numerous and the most 
vital class in all the land. 

We incline to the latter view, so far as the strict 
business organizations are concerned. Where co- 
operation has succeeded in business it will never 
be surrendered. Indeed, it has not been sur- 
rendered in many communities, even through the 
years, where it was not a success! The farmer 
learns and accomplishes too much in the coopera- 



272 The Modern Farm Cooperative Movement 

live organization, so much more than he can as an 
individual, that he prefers to hang on even in the 
face of the inevitable. 

Of course, there are rocks in the pathway, many 
of them. And there are bandits and robbers be- 
hind those rocks. The farm cooperative move- 
ment has no path of ease before it. It must strug- 
gle every step of the way, but the struggle will not 
be so hard as it has been in the past, because a be- 
ginning has been made and in all reform move- 
ments that is the most important and vital thing. 

The history of the farm cooperative movement 
has been literally covered with struggle and op- 
position. They seem to thrive on it, else they 
could never have endured. The wonder is that 
many of them have endured. There is, however, 
some advantage in opposition. It serves to keep 
the home folks together ; it makes for fighting effi- 
ciency. 

The future of the farm cooperative movement 
may be said to depend upon the following vital 
factors : 

1. The temper and spirit of the cooperators. 

2. The management selected. 

3. Proper organization in logical trade terri- 
tory. 

4. Federation in principal commodity groups. 

5. Adequate financing. 



The Future of Cooperation 273 

Any one of these factors can wreck the move- 
ment for the time being and defeat the whole pro- 
ject. That is well-recognized, and no one knows 
it quite so well as the advocates of cooperation 
themselves. 

If there is any one thing which the American 
farmer has been educated upon the past five years, 
it is the principle of cooperative marketing. Even 
the president of the United States cannot address 
a speech to the farmers of the country without 
mentioning it and reaffirming the generalizations 
which the farmer has heard from every angle. 
Cooperation is the *' issue'' of the hour with the 
farmer, and the enemies of the movement can 
take slight comfort in the thought that his lack 
of education in the matter may lay him low. 

Of course, the greatest weakness of the move- 
ment is the individual prejudices and jealousies 
which may be aroused. But in this respect, the 
American farmer is not more susceptible than the 
average business man. Business men are daily 
exhibiting the same brand of prejudice and jeal- 
ousy of their fellows which has been used to char- 
acterize the farmer. But the cooperative move- 
ment, the farm organizations and the community 
work fostered by the World War have done much 
to sow the seeds of the cooperative spirit. This, 
every opponent of the movement will admit, will 

18 



274 The Modern Farm Cooperative Movement 

defeat any effort to disrupt the farmer's coopera- 
tive organizations, if it ever secures any great 
currency among rural communities. 

We can only say that the beginning has been 
made. There is no longer any doubts to be raised 
as to what the farmer can do. He can market his 
products cooperatively; market them more eco- 
nomically than the present system, and at a great- 
er saving to himself and no increased cost to the 
consumer — if he will do it. He has the products ; 
he has a sympathetic customer in the consumer, 
and he has the financial ability to propel his own 
canoe. 

The matter rests entirely in his hands. If he 
is lulled into a sense of false security by the siren 
song of his opponents ; if he becomes discouraged 
and disgruntled; if he loses his high hopes, his 
faith, his vision of the future of the agriculture of 
this country — then the fault will be his own. But 
whether he is now digging his own grave or build- 
ing a monument that will endure for all time re- 
mains to be seen. 



APPENDICES 



APPENDIX A 

U. S. Grain Growers, Inc., Contracts 

GRAIN GROWERS' CONTRACT 
Revised Form 

This Agreement made and entered into this 

day of , 19 .... , by and between 



(Here insert name of Elevator Company or Grain Growers' 

Association with whom the Grower contracts) 
a corporation (or) an association duly organized and existing 

under the laws of the State of 

(hereinafter referred to as the Elevator Company), and hav- 
ing its principal place of business at , 

party of the first part, and the undersigned producer of grain 
as owner (entitled to crop rental), or as tenant, of land lo- 
cated in the County of State of 

, ( hereinafter referred to as the 

Grower), party of the second part, 

WITNESSETH : 

That Whereas the Elevator Company is the owner of, 
or has contracted for the use of, facilities for weighing, grad- 
ing, storing and shipping grain in the county aforesaid, and 
has by contract with the U. S. Grain Growers, Inc., (herein- 
after referred to as the U. S. Association), appointed the U. 
S. Association, an agricultural organization, instituted for the 
purpose of mutual help and not having capital stock or con- 
ducted for profit, as its exclusive sales agent in the marketing 



278 The Modern Farm Cooperative Movement 

of grain of the members of said U. S. Association, in order 
to correct the present wasteful and uneconomic methods of 
handling grain, and in order that the said grain can be mar- 
keted and distributed on a cost basis; and 

Whereas the Grower is a bona fide producer of grain by 
virtue of owning or operating farm land, is entitled to the 
ownership and control of all or a part of the grain produced 
thftreon, and is a member of the U. S. Association; and 

Whereas the Grower desires to sell, and the Elevator Com- 
pany desires to purchase, or handle for sale, all the grain that 
shall be produced as hereinafter provided: 

Now Therefore^ the parties agree: 

In consideration of the mutual obligations of the respective 
parties hereto, of similar agreements between other grain 
growers and the Elevator Company, of the outlays and ex- 
penses incurred, and to be incurred, by the Elevator Company 
in carrying out the purposes of this agreement, and in con- 
sideration of the benefits derived from the contractual affilia- 
tions of the Elevator Company with the U. S. Association: 

Section 1. The Elevator Company agrees that it shall pro- 
vide by ownership, lease or otherwise, facilities for weighing, 
grading, storing and marketing grain ; that it shall receive and 
handle as hereinafter specified, or shall purchase at prices, and 
upon such terms, as are hereinafter set forth, all the grain 
hereinafter mentioned tendered to it by the Grower in accord- 
ance herewith; that it shall market all said grain through the 
U. S. Association according to the terms and conditions of the 
contract between the U. S. Association and the Elevator Com- 
pany, which is attached hereto and made a part hereof as 
though copied herein. 

This contract shall govern all the grain named in Section 23, 
which is controlled by the Grower, and produced upon land 



TJ. S. Grain Growers, Inc., Contracts 279 

described in the preamble of this agreement which he now 
owns, or shall hereafter own or operate during the life of this 
contract, and all such grain as he now has in possession, but 
not grain required and used by the Grower, or sold by him 
locally for local use for seed or feed, or sold otherwise with 
the written approval of the U. S. Association. 

Section 2. During the life of this contract the Grower 
agrees to deliver and sell to the Elevator Company, or other- 
wise market through said company, all the grain covered by 
this contract, and grown upon the land above described, at a 
price to be determined as hereinafter set forth. 

Section 3. It is hereby agreed that nothing in this contract 
shall deprive the Grower of control in any degree over his own 
acreage or production. 

Section 4. This contract shall become effective with respect 
to its provisions concerning grain, 10 days after receipt by the 
Grower of a written notice to that effect by the Elevator Com- 
pany. 

This contract shall be in effect from such date to June 30, 
1927, and shall automatically extend and continue in full force 
and effect as to each of the parties hereto from year to year, 
until the same shall have been terminated by either party as 
to any kind of grain in accordance with the following terms 
and conditions. 

(a) Notice in writing of said termination must given by 
such party desiring the termination to the other party at least 
forty-five days, and not more than sixty days, prior to the 
close of the contract year, at the end of which it is sought to 
terminate the contract. 

(b) The party desiring to make such termination must, 
prior to the effective date of such termination, pay any in- 
debtedness then due the other party. 



280 The Modern Farm Cooperative Movement 

(c) If the foregoing conditions are fully complied with, this 
contract shall thereupon be terminated on the date named; 
provided, however, such termination shall not affect any un- 
completed sales or transactions or uncompleted obligations on 
current commitments between the parties hereto; nor release 
either from any indebtedness than unpaid or hereafter ac- 
cruing under this contract. 

Section 5. The title of the grain covered by this contract 
shall remain with the Grower, unless otherwise specified herein, 
until delivered at point of storage or shipment designated by 
the Elevator Company; at the time of such delivery title to 
the said grain shall pass to the Elevator Company when paid 
for, except when otherwise agreed upon by the parties hereto, 
except as to shipment by the Grower on consignment, in which 
case title shall remain with the Grower until sold by the U. S. 
Association, and unless some other arrangement shaU be 
effected by mutual agreement between the parties at the time of 
the transaction, and provided further that the Elevator Com- 
pany shall have the option as agent for the U. S. Association, 
to purchase the grain offered by the Grower for consignment, 
the price and terms of such purchase being determined by 
mutual agreement between said parties. 

Section 6. Upon notice in writing to the Elevator Company 
by the Grower, the contract between the Grower and said 
Elevator Company may be transferred to such other elevator 
company affiliated by contract with the U. S. Association, as 
the Grower shall designate, upon such terms as the U. S. As- 
sociation shall approve. 

It is further agreed that the Grower may, from time to time, 
deliver his grain covered by this contract to another elevator 
company than the one executing this contract, provided the 
other elevator company has executed a contract with the U. S. 



v. S. Grain Growers, Inc., Contracts 281 

Association for the exclusive handling of growers' grain 
through that agency, and provided the condition of the roads 
or the inability of the Elevator Company to handle the grain 
because of lack of storage, or transportation facilities, renders 
it necessary. 

Section 7. This contract cannot be assigned to any person 
except to the purchaser of, and in connection with the bona 
fide sale of, the land owned by the Grower at the time of the 
execution of this contract, or except as it may be assigned by 
one tenant to another tenant succeeding to the former in the 
operation of the land covered by this contract. In case of 
such transfer, this document may be filed with the Elevator 
Company, and a new contract may be executed in lieu thereof. 
Any other attempted assignment shall be of no force or valid- 
ity whatsoever. 

Section 8. This contract shall be terminated whenever the 
Grower shall for any reason be expelled from membership in 
the U. S. Association; but such expulsion shall not affect the 
rights and liabilities of the parties hereto as to the unmar- 
keted grain then in the possession of either party. 

Section 9. Whenever the Grower delivers any grain to the 
Elevator Company, he shall give the Elevator Company a 
signed statement showing what liens, if any, there are upon 
such grain; and the Elevator Company shall have the right to 
pay off all or any part of the said lien or liens in order to 
perfect further its title to the grain, and thereupon the said 
Elevator Company shall make proper deductions for the 
same from the proceeds of the sale of said grain belonging to 
the Grower. If the amount . of said liens is excessive in the 
judgment of the Elevator Company, the Grower hereby agrees 
to pay off sufficient to reduce the same to the amount stated 
by the Elevator Company to be reasonable, or the Elevator 



282 The Modern Farm Cooperative Movement 

Company may handle said grain on the consignment basis, by 
and with the consent of the mortgagee. 

Section 10. The Elevator Company agrees to observe and 
perform such rules and regulations covering the inspection, 
grading and weighing of grain as may be established by the 
U. S. Association not in conflict with state and federal rules, 
regulations and statutes. 

Section 11. From time to time, upon the reasonable request 
of the Elevator Company, the Grower shall furnish such crop 
and statistical data as requested, on the forms provided for 
that purpose by the Elevator Company or the U. S. Associa- 
tion. The Elevator Company, upon the reasonable request 
of the Grower, shall furnish the Grower for his use such in- 
formation concerning market conditions and quotations as it 
shall have in its possession. 

Section 12. The Elevator Company shall pay, and the 
Grower shall accept as payment, for any and all of the grain 
covered by this contract, a price to be determined by one of 
the methods described in Sections 13 and 14, as the Grower 
may elect. The said right of election applies to each kind of 
grain separately. 

Section 13. METHOD A, Individual Sales Method. 

The Grower shall sell to the Elevator Company any grain 
covered by this contract which is not otherwise provided for 
by a valid election of the said Grower, in accordance with 
either of the following methods, Method A-1 or Method A-2, 
or by any other method mutually agreed upon which is in 
harmony with the other provisions of this contract. The 
Grower shall declare his choice of method at the time of the 
delivery of the grain to, or upon the order of, the Elevator 
Company. 

A-1. He may sell for cash at a price offered by the Elevator 
Company. 



TJ. S. Grain Growers, Inc., Contracts 283 

It is expressly understood and agreed that the Elevator 
Company may resell grain so purchased from the Grower 
through the U. S. Association at its own discretion in respect 
to time, place and quantity, and without regard to the action 
of other companies or individuals employing the U. S. Asso- 
ciation as a sales agent. 

A-2. The Grower, singly or jointly with other growers, may 
consign grain through the Elevator Company for sale by any 
method bj^ the U. S. Association, in which case control of time 
of delivery, shipment and sale shall remain with the Grower, 
and the net proceeds of sale, less deductions for costs of 
handling, as hereinafter provided, shall be returned to the 
Grower. This is without regard to the action of other in- 
dividuals and companies employing the U. S. Association or 
Elevator Company as sales agent. 

The Elevator Company is hereby exempted from liability 
for losses in handling, storing, shipping and marketing grain 
committed to it on the consignment basis, where the negligence 
of the Elevator Company is not the proximate cause of such 
loss or damage. 

In all shipments by the Individual Sales Method, the U. S. 
Association shall act solely as sales agent for the Grower or 
the Elevator Company, and shall exercise no power of regula- 
tion or control over time of sale, time of shipment, destination, 
quantity of grain to be sold, or over the price at which the 
grain shall be sold, except as the Grower, under Method A-2, 
or the Elevator Company, under Method A-1, from time to 
time may, at their option, delegate to the U. S. Association 
authority to determine such questions as to individual trans- 
actions. 

Inasmuch as the failure or refusal of the Grower to deliver 
to, and market and sell through, the Elevator Company the 



284 The Modern Farm Cooperative Movement 

grain governed by this contract will cause detriment and injury 
to the Elevator Company, will impair its efficiency and the 
obligations of contracts to which it is a party, and will increase 
its expense and liability to damage, all of which items it is 
impracticable and extremely difficult to fix with precision; 
therefore, if the Grower shall fail or refuse to market or to sell 
through or to the Elevator Company any grain covered by this 
agreement, then the Grower agrees to pay to the Elevator Com- 
pany, and the Elevator Company agrees to accept, the follow- 
ing sums per bushel: wheat, 10c; rye, 10c; flax, 20c; and all 
other grain, 6c; for all grain covered by this contract which is 
sold, marketed or withheld by or for the Grower other than in 
accordance with the terms hereof, as liquidated damages for 
the breach of this contract; all parties agreeing that this con- 
tract is one of a series dependent for its value upon the ad- 
herence of each and all of the contracting parties to each and 
all of the said contracts. The above agreed items are predi- 
cated upon average prices and market conditions for a period 
of years. 

None of the aforesaid payments are to be construed to be a 
penalty or forfeiture but as stipulated liquidated damages 
which are hereby agreed to as reasonably representing through- 
out the period covered by this contract what the Elevator Com- 
pany and the members thereof will suffer by reason of such 
refusal or default. 

This option, described as Method A, whereby the Grower 
may sell individually to the local Elevator Company, is sever- 
able and distinct from the provisions contained in Method B, 
is dependent upon the consideration of the obligation of the 
Elevator Company to furnish facilities for the efficient mar- 
keting of grain through itself and affiliated companies and as- 
sociations, upon the considerations stated in other sections (ex- 



Z7. S. Grain Groivers, Inc., Contracts 285 

cepting therefrom See. 14) of this contract, and upon the con- 
sideration of the obligation of the Grower to sell all his grain 
covered by this contract to or through the Elevator Company ; 
and the validity and binding effect of the provisions contained 
in this Section (13) shall in nowise be dependent upon, or re- 
lated to, the provisions contained in Section 14 of this docu- 
ment. 

All the provisions of this contract, save those contained in 
Section 14, shall apply with full force and effect to the sales of 
grain governed by this Section entitled "Method A." 

Section 14. METHOD B, Pooling Method. 

B-1. Local Pool, (a) The Grower may agree to have all 
of any kind of grain delivered by him to the Elevator Com- 
pany comingled and mixed with grain of like kind and grade 
delivered by other growers, and the same sold during such 
period of time as may be agreed upon between the growers, 
provided storage and transportation facilities shall permit, in 
which case he shall receive, as payment, the average price se- 
cured for all grain of like kind and grade so comingled and 
sold, less deductions for costs of handling, as hereinafter pro- 
vided, and subject to such equitable differentials as said com- 
pany may find necessary to establish. The various lots of 
grain sold under this method shall be known as pools. There 
may be established as many pools of grain as there are kinds 
and grades of grain to be handled. The pools shall include all 
the commitments for any one year. 

(b) The price on the grain delivered by the Grower shall be 
uniform with that paid other growers regardless of any varia- 
tions in the price received from such sales for the several prod- 
ucts of like kind and quality, subject to the differentials applic- 
able, and deductions for the cost of handling. 

(c) On or before the first day of May of each calendar year 
all the growers tributary to the Elevator Company and signing 



286 The Modern Farm Cooperative Movement 

this or other similar contract with the Elevator Company, who 
have elected to participate in the pooling of any kind of grain, 
may choose from among their number a committee of three, to 
be known as the Local Pooling Com- 
mittee (stating in the blank the kind of grain), hereinafter 
designated the Local Pooling Committee, which committee shall 
exercise complete control over the handling, shipping and sell- 
ing of all pooled grain, determining the time, quantity and des- 
tination of sales, and effecting all necessary contracts and other 
arrangements for storage, etc., which may be deemed necessary 
for the efficient marketing of said grain; provided, however, 
that these provisions do not apply to "joint pools," Method 
B-2, where the U. S. Association shall be in control. The per- 
son designated by the Local Pooling Committee to have charge 
of the handling of grain that is pooled and the proceeds of the 
sale of same, shall file a bond with the U. S. Association as 
trustee for the growers joining in the pools subject to their 
jurisdiction ; the said bonds shall be in such form, and amounts, 
and with such sureties as required by the U. S. Association, 
guaranteeing the faithful performance of the duties of the 
said committee and the person so designated. The U. S. Asso- 
ciation, on request, shall furnish all necessary plans, contracts, 
forms, etc., for the proper handling of the pools. The afore- 
said Local Pooling Committee, at the option of the majority of 
said committee, may delegate its powers to the Elevator Com- 
pany, or other agency, on condition that the grain is marketed 
through the U. S. Association. 

(d) The purpose of these provisions is to secure control 
over the pooling of any kind of grain in the hands of those 
who pool. If satisfactory arrangements cannot be made with 
the Elevator Company for handling the pooled grain, then the 
said Local Pooling Committee, or committees, handling one or 



TJ. S. Grain Growers, Inc., Contracts 287 

more kinds of grain, shall have the privilege of contracting 
for the storing and handling of the said grain or grains 
through any other elevator or warehousing company or agency 
as they may determine, without any regard to any conflicting 
provisions in this contract ; provided the other agency handling 
the same shall have a contract for the exclusive marketing of 
the said grain through the U. S. Association. 

In the election of said Local Pooling Committee each of the 
said growers shall have one, and only one, vote. The period 
for which said Local Pooling Committee shall be chosen shall 
be the period which will include all the pools of that kind of 
grain for that year, or until their successors are elected and 
qualified. The compensation, if any, of said Local Pooling 
Committee shall be at the option of the growers so pooling 
their grain, and shall be paid by them pro rata. 

(e) The Local Pooling Committee shall have authority to 
determine when deliveries of grain shall be made. A Grower 
may express his preference and the Local Pooling Committee 
will be guided thereby so far as practicable. 

(f ) The Local Pooling Committee shall weigh, classify and 
grade the grain delivered to the pools by the Grower; credit 
the Grower therewith, mingle or pool said grain with grain of 
like kind and grade delivered to the pools by other growers; 
and, at its discretion, clean, condition, blend or process the 
pooled graia to increase its value as food or as an article of 
commerce. 

(g) The Local Pooling Committee shall furnish the Grower 
a "delivery ticket," and such other document as may be re- 
quired, upon the delivery of his grain, which shall show the 
classification, grade and weight of the grain delivered, the 
pool to which it has been committed, and any advance payment 
made upon it, and other information that may be required. 



288 The Modern Farm Cooperative Movement 

(h) The Local Pooling Committee shall determine the grade 
and quality of all grain tendered in accordance with rules and 
regulations established by the U. S. Association for pooling 
purposes. Regardless of what grade shall be ultimately placed 
upon said grain at the terminal markets, the aforesaid grading 
by the Local Pooling Committee shall control the proportional 
distribution of the net proceeds from the sale of said grain 
among the growers participating in any pool. 

(i) The Local Pooling Committee shall sell through the U. 
S. Association the grain so pooled, at such times, in such quan- 
tities, and for such deliveries, as the Local Pooling Committee 
shall deem advantageous, and at the best prices obtainable 
through the U. S. Association under market and transportation 
conditions, together with grain of like classification delivered 
to the pool by other growers who have signed this or a similar 
contract, and pay over the net amount realized therefrom 
as payment in full to the growers, according to the value of the 
grain delivered by each of them, due debit and credit being 
given for all deductions for cost of handling, differentials and 
adjustments made by the Local Pooling Committee. 

(j) In order to compensate properly the holder of delayed 
shipments, reasonable carrying charges on different kinds and 
grades of grain may be fixed from time to time by the Local 
Pooling Committee, to be credited to growers selling on the 
pooling basis. 

(k) The Local Pooling Committee may transfer pooled 
grain from the local elevator to terminal or other elevators 
for storage, or other purposes. 

(1) The Local Pooling Committee is authorized to exercise, 
without limitation, all the rights of ownership over the grain 
covered by this contract; to mortgage, pledge or hypothecate 
in its name, on its own account, all such grain, or evidences of 



JJ. 8. Grain Growers, Inc., Contracts 289 

the owiiersliip or control of said grain, including bills of lad- 
ing, warehouse receipts, etc. The Local Pooling Committee 
shall distribute said funds pro rata among the growers partici- 
pating in the pool, or it may use part thereof for meeting ex- 
penses in the handling of the pooled grain. 

(m) Any deductions or loss occasioned by the delivery on 
the part of the Grrower of grain of inferior grade or condition, 
shall be charged against the Grower, and deducted accordingly 
from the proceeds going to the said Grower. 

(n) Losses occurring in the handling, storing, shipping or 
marketing of pooled grain, not covered by paragraph (m), 
shall be charged against the pool and not against the individual 
Grower delivering the grain directly affected thereby. 

(o) The Local Pooling Committee shall make as substantial 
an advance payment on the grain committed to the pool as, in 
its discretion, market and financial conditions permit, and as 
soon as practicable after its delivery. 

(p) The proceeds from the sale of grain shall be paid from 
time to time, the final settlement being made within a reason- 
able time after the proceeds from the sale of all the grain in 
the pool have been received, and the deductions for costs of 
handling shall be determined. 

B-2. Joint Pool. When a Local Pooling Committee has 
been created, as above described, it shall be authorized to elect 
whether the grain delivered under this contract — that may be 
pooled with the grain of other growers locally — shall be pooled 
jointly with grain of like grade and variety of the growers 
in one or more other companies. In case the Local Pooling 
Committee does so elect, then the undersigned Grower hereby 
agrees that all of his grain so pooled shall automatically be- 
come committed for sale under the joint pooling method on the 
terms and conditions above specified, and shall be sold in ac- 
19 



290 The Modern Farm Cooperative Movement 

cordance with the provisions covering joint pools contained in 
the contract between the Elevator Gompan}^ and the U. S. 
Association. 

B-3. Export Wheat Pool. (A paragraph is being pre- 
pared covering a voluntary pool of one-third or the exportable 
surplus of the wheat crop, to be inserted at this place.) 

Inasmuch as the failure or refusal of the Grower to deliver 
to, and market and sell through, the Elevator Company will 
impair its efficiency and the obligation of contracts to which 
it is a party, will increase its expense, and liability to damage, 
will hinder the collection of average prices on grain, to the 
detriment and injury of the other growers participating in 
the said pool, all of which items it is impracticable and ex- 
tremely difficult to fix with precision; therefore, if the Grower 
shall fail or refuse to market or to sell through the Elevator 
Company any grain covered by this agreement, then the 
Grower agrees to pay to the Elevator Company, and the Ele- 
vator Company agrees to accept, the following sums per 
bushel : wheat, 10c ; rye, 10c ; flax, 20c ; all other grain, 6c ; for 
all grain covered hj this contract which is sold, marketed or 
withheld by or for the Grower, other than in accordance with 
the terms thereof, as liquidated damages for the breach of this 
contract; all parties agreeing that this contract is one of a 
series dependent for its value upon the adherence of each and 
ail of the contracting parties to each and all of the said con- 
tracts. The above agreed items are predicated upon average 
prices and market conditions for a period of years. 

None of the aforesaid payments are to be construed to be a 
penalty or forfeiture but as stipulated liquidated damages 
which are hereby agreed to as reasonably representing through- 
out the period covered by this contract what the Elevator Com- 
pany and the members tliereof will suffer by reason of sucli 
refusal or default. 



U. S. Grain Growers, Inc., Contracts 291 

In the event that it shall be necessary to enforce by judicial 
proceedings this contract as to grain pooled under Method B, 
the Elevator Company shall bring the action for the benefit of 
all growers who shall have committed their grain for handling 
under said method, and any damages recovered thereby shall 
be the property of said growers. 

The Grower hereby elects to market his grain covered by this 
contract as indicated in Section 23, in accordance with Method 
B, during the period ending June 30, 1927, or the unexpired 
portion thereof. This election shall continue from year to year 
after said date, until revoked by written notice to the Elevator 
Company, which shall be given within sixty days, and not less 
than forty-five days, prior to the close of the contract year 
when the Grower desires this election to terminate. 

The Grower reserves the right to make a similar election in 
the future on other grains if he so desires. 

This contract to sell, described as Method B, whereby the 
Grower may pool his grain for sale, is severable and distinct 
from the provisions contained in Method A, is dependent upon 
the special consideration of the receipt of average prices from 
the sale of grain in the pool; and the validity and binding 
effect of the provisions contained in this Section (14) shall in 
nowise be dependent upon, or related to, the provisions con- 
tained in Section 13 of this document. 

All the provisions of this contract, save those contained in 
Section 13, shall apply with full force and effect to the sales 
of grain governed by this section, entitled Method B. 

Section 15. In the event that any one or more of the fol- 
lowing methods, A-1, A-2, B-1, B-2 or B-3, which may be 
elected by the Grower, shall be lawfully cancelled or held to be 
illegal by a court of competent jurisdiction from which no 
appeal can be, or is taken, then, and in that case the Grower 



292 The Modern Farm Cooperative Movement 

shall have the option of electing one of the other methods 
named. 

Section 16. The Elevator Company, for the sake of uni- 
formity and in order to protect the Grower against the misuse 
of grain committed to it for sale under any of the methods 
described herein, and against the improper use of funds owing 
the Grower as the result of any pools established thereunder, 
agrees to be governed by and to use such receipts and account- 
ing forms as may be prescribed and recommended by the U. S. 
Association, and that with respect to such grain to report to 
and accept accounting supervision by, the said U. S. Associa- 
tion. 

The Elevator Company hereby agrees that all persons re- 
sponsible for the custody of grain covered by this contract, or 
handling money derived therefrom, shall be adequately bonded, 
and that failing to require such bonds, the officers of the Ele- 
vator Company shall be personally liable for any default. 

Section 17. Deduction for the Cost of Handling. On all 
grain governed by this contract, the Elevator Company shall 
be authorized to deduct from the proceeds of the sale of said 
grain the following : 

(a) The amount charged by the U. S. Association for the 
handling of said grain, in accordance with the contract between 
the U. S. Association and the Elevator Company, attached 
hereto; and 

(b) Such reasonable charges as may be established by the 
Elevator Company for handling, weighing, cleaning, storing 
or performing such other services in connection with the said 
grain as the Grower may request, or as may be authorized by 
the terms of this contract. 

Section 18. It is mutually understood and agreed that the 
services rendered to the U. S. Association and all subsidiary 



TJ. S. Grain Growers, Inc., Contracts 293 

companies are to be rendered to the Grower at cost; that the 
deductions for the cost of handling made from the proceeds 
of the sale of grain are payments on account; and that at 
stated periods the operating expenses will be determined, and 
any excess may be returned pro rata to the Grower, or invested 
in facilities for the more efficient marketing of the grain. An- 
nual reports of the said receipts and expenditures shall be 
made, and copy of same shall be furnished each contracting 
Elevator Company. Deduction certificates, or other evidences 
of the same, shall be distributed among the growers in accord- 
ance with the provisions contained in the contract between the 
Elevator Company and the U. S. Association attached hereto. 

Section 19. On grain purchased or handled on the basis of 
a price to be determined upon the net resale value thereof, 1^°° 
deductions for the cost of handling, the Elevator Company, re- 
gardless of who holds title, shall be liable for any loss or dam- 
age in the handling and storing of said grain, which is due to 
the negligence of the said company, but not otherwise. 

It shall be the duty of the Elevator Company to keep fully 
insured all grain held in storage. 

Section 20. The Elevator Company authorized to contract 
under this agreement must be a farmers' cooperative elevator 
company paying patronage dividends and organized under the 
cooperative laws of the state where operating; or, where there 
is not such a law, then in accordance with the requirements of 
the U. S. Association as to the qualifications of a truly cooper- 
ative company. 

In communities where there is a stock company farmers' ele- 
vator, the stockholders or directors of such elevator who are 
members of the U. S. Association may organize a grain grow- 
ers association to become the local contracting body and super- 
vise the handling and financing of members' grain. Where the 



294 The Modern Farm Cooperative Movement 

stockholders or directors of such farmers' elevator do not or- 
ganize such grain growers' association, the U. S. Association 
shall make no attempt to organize such communitj^ prior to 
January 1, 1924. 

Section 21. The Grower shall be permitted to market onlj^ 
that grain, under the provisions of this contract, which he him- 
self, as land owner or tenant, has raised, or to which he is en- 
titled from land which he may own and rent on the basis of a 
share of the crops raised thereon. 

Section 22. If the standard form of contract between the 
U. S. Association and the Elevator Company, referred to here- 
in, shall be changed as to administrative details or methods of 
transacting business, said change shall be deemed ma dp in the 
^Kr^^ o>f said contract attached hereto, and this contract 
amended accordingly. 

Section 23. The Grower elects to market in accordance with 
Method B, known as the "Pooling Method," the following grain 
covered by the foregoing contract : 

The Grower elects to market in accordance with Method A, 
known as the "Individual Sales Method," the following grain 
governed by the foregoing contract : 

Section 24. The signature of the Grower to this instrument 
shall be considered an application for membership in the U. S. 
Association, with which the Elevator Company is affiliated. 
The said Grower agrees to comply with all the requirements as 
to membership, subscribes and agrees to the Certificate of In- 
corporation and By-laws of the U. S. Association, the receipt 
of a copy of which is herebj^ acknowledged by the Grower ; and 
the Grower further authorizes the use of any or all of the $10 
membership fee, in hand, paid to the U. S. Association, to be 
used for organization, and other expenses incidental to the 
completion of the organization of the U. S. Association, the 



TJ. S. Grain Growers, Inc., Contracts 295 

creation of and ownership of securities in subsidiary and 
affiliated companies and other agencies, the securing of mem- 
berships, the acquisition of terminal warehouse facilities and 
for all other purposes authorized and deemed necessary by the 
Board of Directors of the U. S. Association for the immediate 
handling and marketing of grain and for the efficient organi- 
zation of the grain marketing machinery contemplated in this 
agreement. 

Section 25. No party, his agent, or other representative, 
has the right to vary the terms of this written instrument ; and 
it is expressly agreed that no oral changes or modifications of 
the same have been made. 

In Witness Whereof^ the parties hereto, after a full read- 
ing and consideration of the terms hereof, have executed this 
contract on the day and year first above written. 

Post Office 

( Signature of Elevator Company or Lo- 
cal Grain Growers' Association.) 
Party of the First Part. 

Witness : 

By 

Witness : (President.) 

(Signature of the Grower.) 
Party of the Second Part. 

Wheat acreage (1921) 

Corn acreage (1921) 

Oats acreage (1921) 

The U. S. Grain Growers, Inc., hereby acknowledges receipt 
of the $10 membership fee from the above named applicant at 
the place and on the date last above written, and hereby admits 
the said Grower to membership. If, for any reason, the said 



296 The Modern Farm Cooperative Movement 

U. S. Association is not effected, or is not engaged in the 
actual sale of grain within two years from the date hereof, then 
the portion of the said $10 which is not expended shall be re- 
turned to the said Grower who executed the foregoing applica- 
tion for membership. 

U. S. GRAIN GROWERS, INC., 

By 

Agent. 

Witness: , 1921. 

The Grower lives in Congressional District, 

State of 

The elevator is in Congressional District, 

State of 



COOPERATIVE ELEVATOR CONTRACT 
Revised Form 

This Agreement^ made and entered into this day of 

19 ... , between the U. S. Grain Growers, 



Inc., a non-stock, non-profit corporation duly organized and 

existing under the laws of the State of 

(hereinafter referred to as the U. S. Association), party of the 

first part, and the , a corporation (or) 

association, duly organized and existing under the law^s of 

(hereinafter referred to as the Elevator 

Company), party of the second part, Witnesseth: 

In consideration of the mutual obligations of the respective 
parties hereto, of similar obligations between other elevator 
companies and the IT. S. Association, of the expenses incurred 
and to be incurred by the Elevator Company in providing local 
facilities for weighing, grading, storing, handling, processing, 
and shipping grain; of the undertaking on the part of the U. 
S. Association to provide competent statistical, financial, and 



v. S. Gram Growers^ Inc., Contracts 297 

other expert assistants, to establish crop and market news 
gathering agencies, and to acquire the use of marketing facili- 
ties for the purpose of providing an efficient cooperative mar- 
keting system for grain for the purpose of providing the pro- 
ducers with better credit and storage facilities which will tend 
to make possible a more even distribution of grain throughout 
the year, thereby tending to stabilize prices; and in order to 
reduce waste in handling, to encourage a more efficient pro- 
duction, to reduce transportation costs by more direct ship- 
ments from points of origin to centers of consumption, to make 
less frequent and violent fluctuations in prices due to specula- 
tion, and to reduce the excessive costs occasioned by the present 
wasteful, uneconomic system of marketing the grain crops of 
the United States : 

Now^ Therefore^ said parties agree as follows: 

Section 1. The Elevator Company agrees to market through 
the U. S. Association all the grain committed to it for sale or 
shipment by members of the U. S. Association (hereinafter 
called the Growers) under the terms of a contract between the 
said growers and the Elevator Company hereinafter referred 
to as the Growers' Contracts). 

Section 2. The U. S. Association agrees to endeavor to sell 
said grain directly, or otherwise, to millers, manufacturers, ex- 
porters, or others within or without the United States at the 
best prices obtainable by it under market conditions, in ac- 
cordance with the terms of this contract. 

Section 3. Any grain from growers covered by this contract 
that is in possession of the Elevator Company and unsold upon 
the effective date hereof may be committed for sale under this 
contract. 

Section 4. The U. S. Association shall make rules and regu- 
lations for standardizing the manner of keeping warehouse 
records and accounts and for making reports required by the 



298 The Modern Farm Cooperative Movement 

U. S. Association; and the Elevator Company shall observe 
and obey all such rules and regulations and shall permit the 
examination or auditing of said records, accounts, and reports 
by the U. S. Association. 

Section 5. The Elevator Company agrees to make reason- 
able requests of growers for such crop and statistical data as 
the U. S. Association may desire, and to transmit the same 
promptly to the said U. S. Association, using such forms for 
that purpose as may be provided by the said U. S. Association ; 
and the U. S. Association, upon reasonable request therefor, 
shall furnish the Elevator Company for the use of the Grower, 
market news and other information in its possession concern- 
ing the values and market conditions of grains and related 
products in this and other countries. 

Section 6. The U. S. Association may make rules and regu- 
lations and provide inspectors and weighers to standardize the 
methods of weighing, handling, storing, and shipping of grain, 
subject to this contract; and the Elevator Company agrees to 
observe and perform any such reasonable rules and regulations 
as may be prescribed by the U. S. Association not in conflict 
with state and federal rules, regulations and statutes. 

Section 7. The Elevator Company shall report to the XJ. S. 
Association any lien or liens upon the grain covered hj this 
contract, and the U. S. Association may, within its discretion, 
pay off all or any part of such lien or liens and deduct such 
payments and any costs connected therewith from the proceeds 
of the sale of such grain. The Elevator Companj^ shall war- 
rant the title to all grain committed to the U. S. Association for 
sale, except as to any incumbrances reported to the Elevator 
Companjr in writing prior to the time of shipment. 

Section 8. Upon that grain which is committed to the Ele- 
vator Company to be sold on the basis of a price to be deter- 
mined from tlie net resale value thereof, less deductions for tlie 



U. 8. Grain Growers, Inc., Contracts 299 

cost of handling, the U. S. Association, within its discretion, 
may make advance paj^ments as market and financial condi- 
tions warrant; provided, the Elevator Company'- shall fully 
protect the U. S. Association against losses thereby. 

Section 9. It is understood and agreed that the U. S. Asso- 
ciation may represent interests that under ordinary commercial 
conditions might be considered hostile. 

Section 10. It is expressly agreed and understood that all 
debts of the U. S. Association shall be incurred in its own name 
and without responsibility therefor on the part of the Elevator 
Company, except when specific authority or approval of the 
same in writing shall have been given by the Elevator Com- 
pany. 

Section 11. The U. S. Association is exempted from liabil- 
ity for losses incurred in marketing and selling grain covered 
by this contract that are not due to its own negligence. 

The Elevator Company shall be responsible for and charged 
with allowances, deductions or losses made or sustained by the 
U. S. Association arising from the negligence of the Elevator 
Company. 

Section 12. Joint Pools. In consideration of the mutual 
obligations of the parties hereto, that the Elevator Company 
shall furnish the necessary facilities for local handling and 
shall sell exclusively through the U. S. Association the grain 
received from members of the U. S. Association, and that the 
U. S. Association shall undertake to supervise the joint pool- 
ing of grain as defined in the Growers' Contracts, and shall 
undertake to provide the facilities which may be reasonably 
necessary for the same, it is hereby agreed between said parties 
as follows : 

(a) The Local Pooling Committee, as defined in the Grow- 
ers' Contracts, shall receive, weigh, process, warehouse, and 
ship all grain committed to a joint pool by members of tlie 



300 The Modern Farm Cooperative Movement 

U. S. Association, subject to orders of the U. S. Association 
which shall be observed and performed insofar as the facilities 
available to the Local Pooling Committee reasonably permit. 
The U. S. Association shall classify all pooled grain by variety, 
quality, grade, or any other commercial standard and mingle or 
pool said grain with grain of like classification committed to 
the pool by other Local Pooling Committees participating 
therein. 

(b) The U. S. Association may order the transfer of said 
grain to any elevator and direct the manner in which it is 
handled therein. 

(c) The U. S. Association shall undertake to sell said grain, 
together with grain of like classification and grade committed 
to the pool by other Local Pooling Committees, at its own dis- 
cretion in respect to time, conditions and terms, at the best 
prices obtainable by it under market conditions, collect the pro- 
ceeds, and shall pay over the net amount received therefrom, as 
payment in full, to the Local Pooling Committees participating 
in the pool, according to the value of the grain contributed by 
each of them, after making deductions for the cost of handling 
and such other charges against said grain as are authorized by 
this contract, and also making such credits as may be due. 

(d) The Growers under contract with the Elevator Com- 
pany under the Growers' Contracts, participating in a joint 
pool, agree that their grain shall be so mingled and that the 
net returns therefrom, less all costs, advances and charges, shall 
be credited and paid to them on a proportional basis, consider- 
ing all differentials and adjustments, out of the receipts from 
the sale of all grain of like classification. 

(e) The pool shall be for a crop year, and payment shall 
be made from time to time, as rapidly as practicable, within 
the discretion of the U. S. Association, in due proportion until 
the accounts of the pool are fully settled. 



TJ. S. Grain Growers, Inc., Contracts 301 

(f ) The U. S. Association may borrow money in its name on 
the grain through drafts, acceptances, notes or otherwise, on 
any warehouse receipt or bill of lading, upon any accounts for 
the sale of the grain or on any commercial paper delivered 
therefor. 

(g) Losses due to failure of customers or banks and losses 
occurring in the handling, storing, shipping or marketing of 
pooled grain shall be charged against the pool and not against 
the individual Grower or Local Pooling Committee delivering 
the grain directly affected thereby, provided the said loss is not 
due to the negligence of the said individual or Local Pooling 
Committee. 

The foregoing agreement as to the handling of joint pools is 
severable and distinct from the balance of this contract; and 
the terms and conditions stated elsewhere in this agreement do 
not depend upon any of the provisions contained in this section. 

Section 13. Deductions for the cost of handling. The pro- 
ceeds from all sales of grain made by the U. S. Association 
shall be paid by the purchasers thereof to the said U. S. Asso- 
ciation, which proceeds shall be blended into one general fund ; 
and the U. S. Association shall deduct from said proceeds such 
uniform amounts or percentages as shall be deemed necessary 
from time to time by the duly constituted officers or repre- 
sentatives of the U. S. Association, in order to meet all ex- 
penses properly chargeable to the handling of such grain ; and 
also certain other deductions shall be made in order to provide 
special funds for carrying out the purposes of the U. S. Asso- 
ciation. The deductions stated in the preceding sentence shall 
be described in this and all related contracts as : deductions for 
the cost of handling. The net proceeds from said sales above 
advances which have been made by a properly constituted 
authority shall be paid to those entitled to the same, in accord- 



302 The Modern Farm Cooperative Movement 

ance with the usual customs of the trade in handling such 
transactions. 

The special funds mentioned in the preceding paragraph 
shall include those deemed necessary by the Board of Directors 
of the U. S. Association for the acquisition, by purchase, lease 
or otherwise, of the control over property to be used by the 
said association; the retirement of obligations incurred in the 
purchase of such property or in the operation of the business 
of the said association; the creation of reserves for such re- 
tirements, for renewals; and for any other expenditures which 
the said U. S. Association, its officers or agents, are authorized 
to incur. 

So far as practicable all capital expenditures and interest 
charges on investments in marketing facilities shall be incurred 
by self-sustaining subsidiary, or affiliated organizations, and 
appropriate charges shall be levied against the grain using the 
facilities furnished by such organizations. All operating and 
capital expenditures, which are lawfully incurred in accordance 
v/ith the powers and duties of the U. S. Association, shall be 
prorated fairly and justly in accordance with the judgment of 
the officers of the U. S. Association against the grain necessi- 
tating such expenditures; provided, however, that if the grain 
is sold on a grain exchange, and no other service of a substan- 
tial character is rendered by' the U. S. Association, the total 
expenditures which shall be considered chargeable against said 
grain shall in no case exceed one per cent of its value, unless 
the standard charge for similar service shall be more than one 
per cent, in which case said total charges by the U. S. Associa- 
tion shall not exceed such standard charge. On other grain 
where facilities requiring capital investment are used, the 
maximum deductions for any one year from the proceeds of 
all sales of grain to be made for capital expenditures, interest 
charges, etc. (aside from ordinary operating, inclwding over- 



V. 8. Grain Growers, Inc., Contracts 303 

head exp(3iises) in order to acquire the ownership or control 
over marketing facilities shall in no case exceed one per cent 
of the value of the grain so handled by the U. S. Association. 
The distinction, in accounting, between capital and operating 
income and expenditures, shall be in accordance, so far as 
practicable, with the rules adopted for common carriers by the 
Interstate Commerce Commission. 

The amount of deductions for the cost of handling, as above 
specified, shall be estimated by the Board of Directors of the 
U. S. Association, and shall be so established as to yield as 
nearly as may be a sum of money equivalent to the operating 
and capital expenditures and reserves, and such other expenses 
as may be reasonably estimated as essential to be incurred by 
the U. S. Association, and its subsidiary organizations, for the 
ensuing year. In case a sum in excess of such requirement 
shall be collected during any fiscal year, it shall be set aside or 
invested to meet the obligations or needs of the future, for the 
use and benefit of the Growers; unless the same shall be rela- 
tively large and substantial, in w4iich case the U. S. Association 
may distribute all, or a part of the same, to its members in pro- 
portion to the grain sold through the U. S. Association, at such 
time as it shall determine. And the Elevator Company, for 
valuable consideration, receipt of which is hereby acknowl- 
edged, waives all right, title and interest in and to any por- 
tion of such funds. 

It is understood and agreed that this contract and the con- 
tract between the Grower and the Elevator Company provide 
fully and adequately for the equitable distribution of earnings 
made by the U. S. Association or its subsidiary organizations, 
and that any charges and deductions hereunder revert back to 
the benefit of the Grower through his membership in the U. S. 
Association. 



304 The Modern Farm Cooperative Movement 

The U. S. Association shall issue certificates to the Elevator 
Company indicating the proportionate amounts of the deduc- 
tions for capital expenditures and of the excess from other 
deductions attributable to grain received therefrom; and the 
Elevator Company shall issue proportionate certificates based 
thereon to the member of the U. S. Association. Such certi- 
ficates shall indicate a prorata interest in such deductions, dis- 
tributable only in the form, at a time and in the manner deter- 
mined by the U. S. Association. The said certificates shall be 
assignable freely by endorsement; but shall not be deemed as 
obligations of the U. S. Association with definite or other ma- 
turity, and shall not bear interest ; and they shall not represent 
any obligations or rights, other than a proportionate owner- 
ship in certain assets held by the U. S. Association, which shall 
not be separable or subject to distribution during the life of 
the U. S. Association, except at the option of the duly consti- 
tuted Board of Directors of the U. S. Association. 

Section 14. Term of Contract. This contract shall be in 
force from its execution to June 30, 1927, and thereafter shall 
continue in full force and effect as to each of the parties hereto 
from year to year, until the same shall have been terminated 
by either party in accordance with the following terms and 
conditions : 

(a) Notice in writing of said termination must be given by 
such party desiring the same, to the other party at least forty- 
five (45) days, and not more than sixty (60) days, prior to the 
close of the contract year, at the end of which it is sought to 
terminate the contract. 

(b) The party desiring to make such termination must, 
prior to the effective date of the same, pay any indebtedness 
then due the other party. 

(c) If the foregoing conditions are fully complied with, this 
contract shall thereupon be terminated on the date named. 



TJ. S. Grain Growers, Inc., Contracts 305 

Provided, however, that this shall not affect any uncompleted 
sales or transactions between the parties hereto, nor release 
either from any indebtedness then unpaid or hereafter accruing 
under this contract, nor relieve the Elevator Company from its 
obligation to sell to or through the U. S. Association, nor the 
U. S. Association from its obligation to market and sell, as the 
agent of the Elevator Company, all of the grain committed to 
it or purchased by it from members of the U. S. Association 
that was grown during the preceding season or seasons sub- 
sequent to the execution of this contract. 

Section 15. On all grain which has been delivered to and is 
under the control of the Elevator Company, and covered by 
this contract which the Elevator Company fails to market 
through the U. S. Association in accordance with the terms and 
conditions herein stated, the Elevator Company agrees to pay 
to the U. S. Association and said U. S. Association agrees to 
accept the following sums per bushel as liquidated damages: 
wheat, 5c; rye, 5c; flax, 10c; for all other grains, 3c. 

Section 16. It is mutually understood and agreed that the 
U. S. Association has a special interest in the enforcements of 
contracts between its members and the Elevator Company and 
may bring action thereon in its own name, in the name of the 
Elevator Company, or in the name of the Grower, as the occa- 
sion may justify. 

In Witness Whereof^ the parties to this agreement have 
hereunto set their hands and seals, the day and year first above 
written. U. S. GRAIN GROWERS, INC. 

By President. 

Party of the first part. 

Party of the second part. 
Postoffice address: 

20 



APPENDIX B 

Personnel of Committees 

The Committee of Seventeen 

The following were the members of the Farm- 
ers' Grain Marketing Committee of Seventeen, 
appointed to formulate a cooperative plan for 
marketing grain on a nation-wide scale : 

1. J. M. Anderson, Equity Cooperative Ex- 
change, St. Paul, Minnesota. 

2. C. A. Bingham, Farm Bureau, Lansing, 
Michigan. 

3. P. E. Donnell, Missouri Farmers' Grain 
Dealers' Association, Waco, Missouri. 

4. John L. Boles, National Equity Union, Lib- 
eral, Kansas. 

5. W. G. Eckhardt, Illinois Agricultural Asso- 
ciation, Chicng'o, Illinois. 

6. C. V. Gregory, Agricultural Editors' Asso- 
ciation, Chicago, Illinois. 

7. C. H. Gustafson, Farmers' Union, Lincoln, 
Nebraska. 

8. William Hirth, Missouri Farmers' Club, Co- 
lumbia, Missouri. 

9. C. H. Hvde, Farmers' Union, Alva, Okla- 
homa. 



Personnel of Conunittees 30< 

10. Dr. E. F. Ladd, Agricultural College, Far- 
go, North Dakota. 

11. Dr. Geo. Livingston, united States Depart- 
ment of Agriculture, Washington. 

12. H. E. Meisch, Farmers' National Grain 
Dealers ' Association, Argyle, Minnesota. 

13. A. L. Middleton, Farmers' National Grain 
Dealers' Association, Eagle Grove, Iowa. 

14. Ralph Snyder, Farm Bureau, Oskaloosa, 
Kansas. 

15. L. J. Tabor, Grange, Barnesville, Ohio. 

16. Clifford Thorne, Farmers' National Grain 
Association, Chicago, Illinois. 

17. Dr. H. J. Waters, Kansas City, Mo. 

The Committee of Fifteen 

The following were the members of the Farm- 
ers' Live Stock Marketing Committee of Fifteen 
appointed to formulate a plan for marketing live 
stock cooperatively : 

1. C. H. Gustafson, Chicago, Illinois. 

2. A. Sykes, Ida Grove, Iowa. 

3. H. W. Mumford, Chicago, Illinois. 

4. Harry G. Beale, Mt. Sterling, Ohio. 

5. J. E. Boog-Scott, Coleman, Texas. 

6. W. J. Carmichael, Chicago, Illinois. 

7. W. A. Cochel, Kansas City, Missouri. 

8. C. E. Collins, Kit Carson, Colorado. 



308 The Modern Farm Cooperative Movement 

9. E. H. Cunningham, Des Moines, Iowa. 

10. Howard M. Gore, Clarksburg, W. Virginia 

11. J. B. Kendrick, Sheridan, Wyoming. 

12. W. A. McKerrow, St. Paul, Minnesota. 

13. J. H. Skinner, LaFayette, Indiana. 

14. 0. 0. Wolf, Ottawa, Kansas. 

15. J. E. Howard, ex officio, Chicago Illinois. 

ALTEENATBS 

1. John G. Brown, Monon, Indiana. 

2. James Clemmens, Kansasville, Wisconsin. 

3. W. S. Corsa, A¥hite Hall, Illinois. 

4. John M. Evvard, Ames, Iowa. 

5. E. C. Lasater, Falfurrias, Texas. 

6. Wm. H. Pew, Eavenna, Ohio. 

The Comniittee of Eleven 

The following are the members of the National 
Dairy Marketing Committee of Eleven appointed 
to formulate a cooperative plan for national dairy 
marketing : 

1. C. Bechtelheimer, Waterloo, Iowa, President 
of the Iowa Creamery Association. 

2. Milo D. Campbell, Coldwater, Michigan, 
President of the National Milk Producers' Fed- 
eration. 

3. Fred H. Harvey, Gait, California, a director 
of the California Milk Producers' Association. 



Personnel of Committees 309 

4. Harry Hartke, Erlanger, Kentucky, a di- 
rector of the Queen City Milk Producers' Asso- 
ciation. 

5. C. L. Hawley, Salem, Oregon, State Dairy 
and Food Commissioner. 

6. E. B. Heaton, Wheaton, Illinois, director of 
the Dairy Marketing Department of the American 
Farm Bureau Federation. 

7. Henry Krumrey, Plymouth, Wisconsin, Pres- 
ident of the Wisconsin Cheese Federation. 

8. C. Larsen, Chicago, Illinois, director of the 
Dairy Products Marketing Department of the Illi- 
nois Agricultural Association. 

9. John D. Miller, Susquehanna, Pennsylvania, 
Vice-President of the Dairymen's League, Inc. 

10. H. B. Nickerson, Elk River, Minnesota, a di- 
rector of the Twin City Milk Producers ' Associa- 
tion and president of the Minnesota Cooperative 
Creamery Association. 

11. Eichard Pattee, Boston, Mass., managing 
director of the New England Milk Producers' 
Association. 

The Committee of Twenty-one 

The following are the members of the National 
Fruit Marketing Committee of Twenty-one ap- 
pointed to bring out a plan for national coopera- 
tive marketing of fruits and fruit products : 



310 The Modern Farm Cooperative Movement 

1. W. B. Armstrong, Yakima, Washington. 

2. Sheridan W. Baker, Santa Rosa, California. 

3. C. E. Durst, Chicago, Illinois. 

4. W. F, Farnsworth, Waterville, Ohio. 

5. M. B. Goff, Sturgeon Bay, Wisconsin. 

6. Prof. Laurenz Greene, LaFayette, Indiana. 

7. Chas. E. Hardy, Hollis, New Hampshire. 

8. Orlando Harrison, Berlin, Maryland. 

9. W. B. Hunter, Atlanta, Georgia. 

10. E. A. Ikenberry, Independence, Missouri. 

11. A. E. Johnson, Grand Junction, Colorado. 

12. W. S. Keeline, Council Bluffs, Iowa. 

13. Clement B. Lewis, Riverton, New^ Jersey. 

14. C. I. Lewis, Salem, Oregon. 

15. B. F. Moomaw, Cloverdale, Virginia. 

16. N. R. Peet, Rochester, New York. 

17. R. B. Peters, Devore Ranch, Devore, Calif. 

18. Gray Silver, Martinsburg, West Virginia. 

19. C. E. Stewart, Tampa, Florida. 

20. William H. Stites, Henderson, Kentucky. 
2L Dr. O. E. Winberg, Silverhill, Alabama. 



APPENDIX C 

Committee of Fifteen Report 

INTKODUCTORY TO THE REPORT 

The Committee early found that the problems 
in connection with live stock marketing which the 
Committee would be obliged to consider involved 
cooperative marketing, orderly marketing, live 
stock production and marketing information, 
transportation and financing. 

Some live stock organizations fairly represent 
special live stock interests or regions of produc- 
tion. Yet these for the most part have not been 
sufficiently financed nor are they sufficiently na- 
tional in scope to function strongly and effectively. 

The need for a national live stock organization 
representative of a very large number of the rank 
and file of live stock producers in all parts of the 
United States has long been felt. Such an asso- 
ciation properly financed and directed should be 
able to represent wisely and with authority the 
live stock producers' interests, wherever and 
whenever l:hey are concerned. 

The Committee has come to feel that such an 
organization can best be built with more efficient 
live stock marketing as its primary purpose. 



312 The Modern Farm Cooperative Movement 

Without becoming a burden to anyone such an or- 
ganization should grow to be largely representa- 
tive of live stock producers and easily become self- 
supporting. 

The building of such an organization hinges 
upon the willingness of live stock producers to 
cooperate in marketing their live stock and it is 
convinced that until they do so cooperate there is 
little hope of substantial and permanent improve- 
ment in live stock marketing. 

To provide the required agencies for the effec- 
tive handling of the live stock marketing problems 
and otherwise promote the best interests of live 
stock producers it is necessary for the producers 
themselves to have : 

First. Producers' Live Stock Commission As- 
sociations also hereinafter referred to as Ter- 
minal Commission Associations established at the 
terminal markets, which organizations shall be 
corporations not for pecuniary profit, and shall be 
organized under the terms hereinafter set forth. 

Second. A national organization of live stock 
producers hereinafter referred to as the National 
Live Stock Producers' Association established in 
accordance with plans hereinafter set forth. 

Third. Producers' Stocker and Feeder Com- 
panies established in connection with Terminal 
Commission Associations as hereinafter provided. 



Committee of Fifteen Report 313 

Fourth. Cooperative Live Stock Shipping As- 
sociations established at shipping points where 
available business will justify and local sentiment 
generally endorse such organizations organized 
according to plans hereinafter set forth. 

PKODUCEKS' LIS^E STOCK COMMISSION ASSOCIATIONS 

Section 1. Name. Producers' Live Stock Com- 
mission Association of (insert 

the market where located). 

Section 2. The Producers' Live Stock Commis- 
sion Associations shall be incorporated cooper- 
ative associations. The Producers' Live Stock 
Commission Associations may organize Produc- 
ers' Stocker and Feeder Companies upon their 
respective markets. 

Section 3. The Producers' Live Stock Commis- 
sion Associations shall be established at the vari- 
ous markets contingent upon the local demand and 
the probable business at such market, these facts 
to be determined by the Board of Directors of the 
National Live Stock Producers' Association in 
conference with patrons of the terminal market 
involved. 

Section 4. Nature of Business. The general 
business of the Producers' Live Stock Commis- 
sion Associations shall be the selling, handling, 
and marketing of live stock for its members and 



314 The Modern Farm Cooperative Movement 

others. Each association shall be authorized to 
acquire, use and dispose of all real and personal 
property incident to the conduct of its business. 
It shall be authorized to borrow money and to 
pledge its property, real, personal and mixed, for 
the payment of same, also to make whatever con- 
tracts are necessary for the conduct of its busi- 
ness. 

Section 5. Eligibility. To become members of 
the Association, individuals, partnerships and cor- 
porations must be bonafide live stock producers, 
either as breeders or feeders, or both. Coopera- 
tive Live Stock Shipping Associations acting as 
producers' shipping agents are eligible to mem- 
bership. The Board of Directors of each Ter- 
minal Commission Association reserves the right 
to determine whether or not an applicant is eligi- 
ble to membership and entitled to the benefits of 
the Association. 

If requested to do so, persons, partnerships, 
corporations or shipping associations, must sub- 
mit evidence to the Board of Directors that they 
are eligible to membership. If after becoming 
members of the Association they shall cease to be 
bonafide producers of live stock they shall forfeit 
their rights in the Association and no refund or 
earnings, except such as have accumulated, shall 



Committee of Fifteen Report 31o 

be thereafter made to them until they shall again 
become producers of live stock. 

The directors of a Terminal Commission Asso- 
ciation, under appropriate rules and regulations, 
shall have the right to expel for cause from mem- 
bership any shipping association or individual 
partnership or corporation or producer and to 
deny all further rights and privileges in the Ter- 
minal Commission Association. 

Section 6. Interchangeability. Members of any 
Terminal Commission Association shall be enti- 
tled to share in the benefits of any other Terminal 
Commission Association which Such members may 
patronize. 

Differences of opinion or disputes shall be ad- 
justed as far as possible between terminal com- 
mission associations or the individual and the Ter- 
minal Commission Association by the Directors 
of the Terminal Commission Association, but 
where this cannot be accomplished, the matter 
shall be referred by either party to the Board of 
Directors of the National Live Stock Producers' 
Association for action and its decision shall be 
final. 

Section 7. Fees. The membership fee in Pro- 
ducers' Live Stock Commission Associations for 
Cooperative Live Stock Shipping Associations 
shall in no case be less than $50. This shall be the 



316 The Modern Farm Cooperative Movement 

fee for any association shipping cooperatively 
fifty cars or less per year. The membership for 
associations shipping more than fifty cars annu- 
ally shall be 50 cents per each additional car based 
on the previous year's business. 

Members of cooperative shipping associations 
holding memberships in the terminal commission 
associations who consign live stock direct to the 
Producers' Live Stock Commission Association 
instead of through the cooperative live stock ship- 
ping associations must pay a membership fee of 
$10. 

For an individual, partnership or corporation 
not a member of a cooperative shipping associa- 
tion the membership fee shall be $10. Member- 
ship includes membership in the National Live 
Stock Producers' Association and the Producers' 
Stocker and Feeder Company as well. 

Section 8. Government. The government of 
the Terminal Commission Association shall be 
vested in its board of directors. 

Section 9. Number of Directors. Each Ter- 
minal Board of Directors shall consist of not less 
than five nor more than eleven selected by Dele- 
gates as hereafter provided. 

Section 10. Length of Term. Each Director 
regularly elected for a full term shall serve for 
three vears. In case the Board of Directors con- 



Committee of Fifteen Report 317 

sists of five, two shall be elected each of two con- 
secutive years and one for the succeeding years. 
In case there are more than five Directors, as 
nearly one-third shall be elected each year as pos- 
sible. 

Section 11. Eligibility of Directors. In order 
to be eligible to the Terminal Board of Directors 
a person must be a member of the Terminal Com- 
mission Association or a Live Stock Shipping As- 
sociation, partnership or corporation that is a 
member of the Terminal Commission Association, 
provided that he is a bonafide live stock producer 
at the time of his election. 

Section 12. First Board of Directors. The first 
Terminal Board of Directors of the Terminal 
Commission Association on any market shall be 
selected by the Board of Directors of the National 
Live Stock Producers' Association in conference 
with official representatives designated by the 
Executive Committees of the state farm bureau 
federations, whose members largely patronize 
that terminal market, at a joint conference called 
by the Board of Directors of the National Live 
Stock Producers Association. As nearly as pos- 
sible, one-third of the first Board shall be ap- 
pointed to serve until the first annual meeting, 
one-third until the second annual meeting and one- 
third until the third annual meeting. 



318 The Modern Farm Cooperative Movement 

ISectioii 13. Duties of Directors. In addition 
to the otlier duties of the Directors the Terminal 
Boards of Directors shall elect their own officers 
and the manager. In case of vacancy in the Ter- 
minal Board of Directors the remaining members 
of the Board shall select a successor to fill such 
vacancy until the next regular election of terminal 
Directors. The Terminal Board of Directors shall 
select annually from their own number an execu- 
tive committee of not less than three to perform 
such duties as are assigned to them by the Board, 
and not inconsistent with the by-laws and articles 
of incorporation. The selection of terminal man- 
agers shall be made in consultation with, and with 
the advice of the Board of Directors of the Na- 
tional Live Stock Producers' Association. No 
Director shall serve as manager, salesman or em- 
ployee of a Terminal Commission Association, 
provided that nothing herein shall preclude di- 
rectors from functioning in the performance of 
their duties as members of the Board. 

Section 14. Number of Delegates. Members 
of Terminal Commission Associations shall be 
represented by delegates who shall elect the Di- 
rectors of the Terminal Commission Associations 
as hereinafter provided. Each state shall be enti- 
tled to one delegate, provided there is consigned 
from that state not less than fifty cars of live stock 



Coiinnilfce of F iff ecu Report 319 

aiiimally to tlie Terminal Commission Associa- 
tion. There siiall be an additional delegate for 
each additional 200 cars or major fraction thereof 
of live stock over fifty consigned annually from 
the state to the Terminal Commission Association. 

Section 15. Eligibility of Delegates. Persons 
eligible to election for delegates must be members 
of the Terminal Commission Association or a Live 
Stock Shipping Association that is a member of 
the Terminal Commission Association. 

Section 16. Nomination and Election of Dele- 
gates. A definite plan for, and the execution of 
the plan for the nomination and election of dele- 
gates to the first and subsequent meetings of dele- 
gates shall be made by the State Farm Bureau 
Federations whose members patronize that par- 
ticular terminal market, in accordance with the 
laws governing the membership in the terminal 
associations. This plan shall be worked out in 
consultation and with the advice of the Board of 
Directors of the National Live Stock Producers' 
Association. 

Section 17. Meeting of Delegates and Election 
of Directors. The delegates for each Terminal 
Commission Association shall be called in session 
annually by the terminal Board of Directors for 
such Association and at that time the delegates 
shall elect the members of the said Board, which 



320 The Modern Farm Cooperative Movement 

shall be apportioned to represent states or dis- 
tricts according to volume of business contributed 
to the Terminal Commission Association. 

Section 18. Prorating. The benefits of the 
Terminal Association to be refunded will be pro- 
rated back to the members and organizations 
transacting business with the Association after 
deducting therefrom, within the discretion of the 
Directors, the cost of shipping, receiving market- 
ing, feeding, watering, holding, delivering, weigh- 
ing and all other charges incident to the selling of 
live stock and the transaction of the business of 
the Association ; the prorated apportionment nec- 
essary to the maintenance of the National Board 
of Directors, and to establish a fund which will 
create and constitute sufficient commercial re- 
serves and surplus shall be held in the treasury of 
the Association. The surplus fund so established 
and maintained shall not be used for operating 
expenses, payment of patronage dividends, or 
other purposes, unless authorized by the Terminal 
Board of Directors. 

Section 19. Basis of Prorating. The prorat- 
ing of the benefits of the Terminal Commission 
Association shall be done on the basis of the 
amount paid in commissions as elsewhere speci- 
fied. 



Committee of Fifteen Report 321 

Section 20. To Whom Prorated, Prorating 
shall be done as early as possible in January of 
each year, and payment shall be made as soon 
thereafter as possible. The money shall be sent 
direct to all members of a terminal association, 
and for any other it shall be held to his credit by 
the Terminal Board of Directors for not to exceed 
one year from date of the first shipment unless a 
sufficient amount has accrued to pay for a mem- 
bership previous to the expiration of that time. 
At such time membership certificate will be issued, 
provided a person is eligible to membership and if 
not, it will be paid at the conclusion of the year 's 
business when members' refunds are paid, but at 
one-half the rate of refund for members, the re- 
maining being placed in the surplus account. 

NATIONAL, LIVE STOCK PEODUCERS ' ASSOCIATION 

Section 21. National Organization. In order 
to coordinate the work of these terminal commis- 
sion associations and otherwise promote the wel- 
fare of live stock producers, there shall be created 
a National Live Stock Producers' Association, a 
corporation not for pecuniary profit, national in 
scope and function. The government of the Na- 
tional organization shall be vested in a Board of 
Directors. 

21 



322 The Modern Farm Cooperative Movement 

Section 22. Membership in the National Live 
Stock Producers^ Association. Individual mem- 
bers, members of partnerships, corporations, or 
shipping associations that are members of Ter- 
minal Commission Associations or Stocker and 
Feeder Companies, and these associations and 
companies shall constitute the membership of the 
National Live Stock Producers' Association. 

Section 23. First National Live Stock Board 
of Directors, The first National Live Stock 
Board of Directors shall consist of not less than 
nine persons designated by the Executive Com- 
mittee of the American Farm Bureau Federation 
from eighteen nominated by the Farmers Live 
Stock Marketing Committee of Fifteen in addition 
to the members of the Committee of Fifteen, in- 
cluding the alternates, due consideration being 
given to geographical location in the selection. 
The Board shall form a temporary organization, 
which shall proceed at once to organize and incor- 
porate the National Live Stock Producers' Asso- 
ciation according to law. Other members shall be 
added to the Board as terminal associations are 
organized under this plan, but the voting power of 
these respective directors shall be in proportion 
to the number of cars of live stock consigned to 
the respective Terminal Commission Associations. 
An annual business of 10,000 cars shall be the 



Committee of Fifteen Report 323 

basis for one vote. These nine shall hold office 
until the second annual meeting at which time as 
many of the original Board of Directors shall re- 
tire as there are terminal commission associations 
having representations on the National Board 
provided, in no case shall more than four directors 
retire at the second annual meeting, the remaining 
^ve to retire at the third annual meeting. 

Section 24. Number of National Directors. 
Each Terminal Commission Association is enti- 
tled to one member on the Board of Directors, who 
shall be elected by the Board of Directors of the 
respective Terminal Commission Association. He 
may or may not be a member of the Terminal 
Board. The voting power of the respective di- 
rectors shall be in proportion to the number of 
cars of live stock consigned to the respective Ter- 
minal Commission Associations, as specified in the 
preceding paragraph. 

Section 25. Length of Term of National Direc- 
tors. Each National Director regularly elected 
for a full term shall serve for three years. 

Section 26. Eligibility of National Directors. 
The same rule of eligibility for National Directors 
shall apply as for terminal directors (See Sec- 
tion 11). 

Section 27. Duties of the National Live Stoch 
Board of Directors. The National Live Stock 



324 The Modern Farm Cooperative Movement 

Board of Directors shall represent the various 
phases of Ehe live stock industry. Its duties shall 
be: 

1. To elect their own officers, executive commit- 
tee and employees. No director shall serve as an 
employee of the National Live Stock Producers' 
Association nor of a Terminal Commission As- 
sociation, provided that nothing herein shall pre- 
clude directors from functioning in the perform- 
ance of their duties as members of the Board. 

2. To incorporate, establish and coordinate the 
work of Terminal Commission Associations and 
Producers' Stocker and Feeder Companies. 

3. To provide a uniform system of bookkeeping 
and accounting and secure proper auditing of the 
books of Producers' Live Stock Commission Asso- 
ciations and Producers ' Stocker and Feeder Com- 
panies. 

4. To encourage cooperative live stock shipping 
associations and assist them in making their work 
effective. 

5. To perfect and put into operation the plans 
for orderly marketing. 

6. To furnish to producers, feeders and gra- 
ziers, information which may enable them to mar- 
ket their live stock more intelligently. 

7. To establish as soon as practicable a Trans- 
portation Department. 



Committee of Fifteen Report 325 

8. To interpret for producers informations fur- 
nished by the Bureau of Markets and Crop Esti- 
mates. 

9. To secure additional data from live stock 
producers and their organizations. 

10. To serve as a Board of Arbitration when 
differences arise between those under its juris- 
diction. 

11. To formulate rules and regulations under 
which authority may be granted to expel members 
for cause. 

12. To perform any additional service that will 
be of benefit to the industry and within the re- 
sources of the Association. 

Section 28. Executive Committee. The Board 
shall select annually from their own number a 
small executive committee of not less than three 
to perform such duties as are assigned to them 
by the Board, and not inconsistent with the by- 
laws and articles of incorporation. 

Section 29. Financing the National Live Stoch 
Producers' Association. The aggregate cost of 
maintaining, operating, and conducting the Na- 
tional Live Stock Producers' Association shall be 
provided for by the Terminal Commission Asso- 
ciations, setting aside for that purpose out of the 
regular commission charges not more than fifty 
cents per car of stock consigned to them and remit 



326 The Modern Farm Cooperative Movement 

same at the end of each month to the National 
Live Stock Producers' Association. For the first 
year and thereafter until the resources of the Na- 
tional Association shall exceed its requirements^ 
the per car charge to be set aside and remitted by 
the Producers' Terminal Commission Associa- 
tions shall be fifty cents. 

Section 30. Location. The main office of the 
National Live Stock Producers' Association shall 
be in Chicago, Illinois. 

PEODUCEES' STOCKEE AND FEEDEE COMPANY 

Section 31. Name. Producers' Stocker and 
Feeder Company of 

Section 32. Form. The Producers' Stocker 
and Feeder Companies shall be organizations not 
for profit, operated on the cooperative plan. 

Section 33. Location. The establishment of 
terminal Producers' Stocker and Feeder Com- 
panies on the various markets shall be contingent 
upon their need in connection with the business 
of the Producers' Live Stock Commission Asso- 
ciations and shall be determined and agreed upon 
jointly by them and the National Live Stock 
Board of Directors. 

Section 34. Nature of Business. The business 
shall be the purchasing, selling, handling and mar- 
keting of live stock for itself, its merabers and 
others and any and all other things desirable or 



Committee of Fifteen Report 327 

necessary to the successful conduct of the busi- 
ness. It shall be authorized to acquire, use and 
dispose of all real and personal property incident 
to the conduct of its business. It shall be author- 
ized to borrow money and pledge its property, 
real, personal and mixed, subject to the approval 
of its Board of Directors. It shall be authorized 
to make whatever contracts are necessary for the 
conduct of its business. 

Section 35. Membership. Membership in the 
Producers' Live Stock Commission Association 
carries with it a membership in and the benefits 
of the Producers' Stocker and Feeder Company. 

Section 36. Government. The government of 
the Producers' Stocker and Feeder Company 
shall be vested in its Board of Directors. 

Section 37. Interchangeahility. A person or 
shipping association that is a member of one Pro- 
ducers ' Stocker and Feeder Company shall be 
entitled to the benefits of any other Producers' 
Stocker and Feeder Company which he may 
patronize. 

Section 38. Prorating of Benefits. The bene- 
fits of the Producers' Stocker and Feeder Com- 
panies shall be prorated after deducting there- 
from all expenses incident to the conduct of the 
business and a percentage which will, in the dis- 
cretion of the Directors, establish a fund which 



328 The Modern Farm Cooperative Movement 

will create and constitute sufficient commercial re- 
serves and surplus. The surplus fund so estab- 
lished and maintained shall not be used for oper- 
ating or other expenses, except as authorized by 
the Board of Directors. 

COOPEKATIVE LIVE STOCK SHIPPING ASSOCIATIONS 

Many live stock producers are not in close 
enough contact with live stock marketing condi- 
tions, particularly market quotations, and the 
various market classes and grades of live stock, to 
market their live stock to advantage. The Co- 
operative Live Stock Shipping Association af- 
fords the individual producer an opportunity to 
place his live stock on the open market at mini- 
mum cost and receive for it what the market will 
pay for the grade of live stock he has for sale. 

The educational value of this method of live 
stock marketing cannot be too strongly empha- 
sized, as the farmer soon learns the value of type, 
quality and condition in live stock and many have 
thus learned to adjust their plans of production 
along lines which will yield the greatest net prof- 
its. 

This educational opportunity should be grasped 
by farm advisers, county agents and agricultural 
extension departments. It is believed that agri- 
cultural colleores miffht well offer short courses for 



Committee of Fifteen Report 329 

Live Stock Shipping Association Managers to 
familiarize them with the various market classes 
and grades of live stock and the records and ac- 
counting systems involved in their work. The 
economic necessity that led to the organization of 
Cooperative Live Stock Shipping Associations 
may be still further emphasized by pointing out 
that a large number of live stock producers, joined 
in an organization, acting cooperatively rather 
than individually, are in a position to present 
more effectively their just claims for adjustment, 
bring about needed changes and improved prac- 
tice at the markets and ultimately, as we believe, 
make some progress in regulating the flow of live 
stock to the market. 

This plan is presented with the hope that it 
points the way to secure greater uniformity in or- 
ganization and practices among Live Stock Ship- 
ping Associations by suggesting some underlying 
principles which your committee feels will if gen- 
erally adopted render the whole shipping associa- 
tion movement of greater service to the live stock 
producers. It will be found of especial help to 
new associations which may be formed. 

It is believed that the adoption of the principles 
herein set forth will promote the growth and de- 
velopment of the movement to a point where the 
numerical strength of the organization and where 



330 The Modern Farm Cooperative Movement 

the volume of business handled will constitute an 
effective agency through which producers may ac- 
complish improvements in marketing where 
needed and be able to represent strongly the live 
stock producers ' interests. 

Section 39. Purpose. The purpose of the Co- 
operative Live Stock Shipping Association is to 
market the live stock for its members and others 
under the rules and regulations under which they 
may operate with a view of securing the highest 
market value and reduce to the minimum the costs 
of marketing. No system of marketing can be 
called advantageous to the live stock producer 
that overlooks either of these important consider- 
ations. 

Section 40. Form of Organization. The Co- 
operative Live Stock Shipping Association is a 
corporation not for pecuniary profit operated on 
the cooperative plan. It should be incorporated 
because it provides for limited liablity of mem- 
bers. 

In the organization of new associations, local 
conditions and the policy being followed in the 
state will largely determine the type of organiza- 
tion chosen, — local, regional or country-wide. It 
is urged that the shipping territory be made large 
(mough to warrant the employment of a compe- 
tent manager. It is desirable that all live stock 



Committee of Fifteen Report 331 

shipping associations be incorporated under the 
laws of the state in which located. 

Local, county and regional associations can most 
advantageously and economically function 
through some strong state-wide farm organiza- 
tion not confined to or undertaking to represent a 
single farm product or commodity but an associa- 
tion which is serving or attempting to serve all 
farmers. Specialized collective needs of shipping 
associations should be safeguarded by the Ter- 
minal Producers' Commission Associations. 

Section 41. Membership. It is impracticable 
at this time to lay down a hard and fast rule gov- 
erning eligibility to membership in a Live Stock 
Shipping Association. The general principle, 
however, should be recognized that the best inter- 
ests of the live stock producers of the country will 
be served by the strengthening of not only the co- 
operative shipping associations, but also the farm 
organizations that foster them. It is believed, 
therefore, that this can be best accomplished by 
making, where conditions make such a policy prac- 
ticable, the basis of membership in the Coopera- 
tive Live Stock Shipping Association, member- 
ship in the general farmers organization of the 
county and state. 

Suitable provision should be made to make the 
facilities of the Cooperative Shipping Association 



882 The Modern Farm Cooperative Movement 

available to all live stock producers under proper 
rules and regulations which will strengthen rather 
than weaken the organization. Encouragement 
should be offered the carlot shipper to market his 
stock through the shipping association in order 
that all of the stock of each locality will eventually 
be marketed through the cooperative shipping as- 
sociation. 

Since the same principles underlying the organ- 
ization of Cooperative Live Stock Shipping As- 
sociations, namely, economy and more advantage- 
ous marketing, apply with equal force to the or- 
ganization and operation of producer-owned and 
controlled terminal commission associations, the 
individual joining the one should simultaneously 
join the other. 

Section 42. Government. The control and 
government of the association shall be vested in 
a Board of Directors composed of at least five 
members of the association who are bonafide live 
stock producers. 

Section 43. Officers. The Board of Directors 
shall elect from their own number a President, 
Vice President and a Secretary-Treasurer. These 
officers shall hold the same offices in the Associa- 
tion as in the Board. 

Section 44. Manager. The Board of Directors 
shall employ a manager to carry on the 'business 



Committee of Fifteen Report 333 

of the association, under their authority, supervi- 
sion and guidance. Upon the manager rests great 
responsibility for the success or failure of the 
shipping association. He should be selected with 
the greatest care. Adherence to the following 
fundamental considerations is important. The 
manager should be : 

a. Truly sympathetic with and a thorough be- 
liever in Cooperative Marketing. 

b. A man who has the confidence of the farmers 
in the community as to his honesty, ability and 
judgment. 

Shipping associations are urged to adopt fair 
rates of pay in order that competent managers 
may be secured. Every encouragement should be 
given to good and efficient managers to retain 
them in the service. It is recommended that sur- 
ety and indemnity bonds be provided for the man- 
ager at the expense of the organization. 

It is recommended that the manager should not 
be permitted to buy and sell or ship live stock 
other than that he has produced on his own ac- 
count, except as the agent or manager of the co- 
operative shipping association. 

The basis for determining the rate per hundred 
or per car which the manager receive for his serv- 
ices should be determined by the service he is 



334 The Modern Farm Cooperative Movement 



Hogs 




Sheep 


Butcher 


Hogs 


Lambs 


Packers 




Ewes 


Stags 




Yearlings and 


Boars 




Wethers 


Pigs, 




Bucks 


Crips, Busts 





called upon to render and the volume of business 
the association transacts. 

Section 45. Methods of Handling Stock. It is 
recommended that the manager classify all stock 
as received at the shipping point, weighing same 
according to the following classes : 

Cattle 
Steers 
Cows 
Heifers 
Bulls 
Calves 

Section 46. Records and Accounting. In order 
to facilitate the study of their business and to im- 
prove their practices, it is desirable that shipping 
associations keep records in such manner as to 
show separately insurance funds, managers' fees, 
and operating expenses. The insurance rate 
should be carefully adjusted from time to time to 
the actual risk on the different classes of stock. 
Managers' fees should similarly be adjusted to 
the amount of work entailed in the different cases. 
An ample insurance fund should be first accu- 
mulated, after which the insurance charge should 
be lowered to a point where it meets only current 
losses ; also a sufficient reserve fund should be ac- 



Committee of Fifteen Report 335 

cumulated to place the association on a safe busi- 
ness basis. Managers' fees should also be re- 
duced as increased volume makes it possible. 

A uniform system of records and accounting is 
desirable, including: 

1. Weigh ticket. 

2. Invoice. 

3. Prorating sheet. 

4. Member's statement. 

5. Shipment record envelope. 

Shipping association accounts should be aud- 
ited at least once a year. It is recommended that 
the farmers' organizations fostering cooperative 
live stock shipping associations shall provide aud- 
iting service for them. 

The recommendation is made that all shipping 
associations make monthly reports to such farm- 
ers' organization and the terminal sales agency, 
showing movement of live stock, cost of market- 
ing, shrinkage and other information. Such re- 
port forms should be uniform as to essentials for 
the several states. 

The above recommendations as to the organiza- 
tion and management of cooperative live stock 
shipping organizations are made in the spirit of 
outlining ideals toward which the individual or- 
ganization should work and not in the spirit of 
promulgating arbitrary standards to be imme- 



336 The Modern Farm Cooperative Movement 

diately adopted by all organizations. In striving 
to make the individual organization more efficient, 
it is realized that local conditions, to a large ex- 
tent, govern the rapidity with which improved 
methods may be adopted. 

OEDEKLY MAEKETING 

Section 47. Need for Orderly Marketing. A 
survey of the production and marketing of live 
stock and live stock products emphasizes the nec- 
essity of devising a more orderly system of mar- 
keting than now prevails. There is no one group 
of men representing producers who can speak 
with sufficient authority to put into execution any 
effective plan which might be suggested. 

Fundamental facts prevent the development of 
a thorough system of orderly marketing at pres- 
ent. There is but little reliable information avail- 
able as to the supply and demand for live stock 
to be marketed or as to the time of marketing. 
It has been impossible to secure the cooperation 
of intrenched existing agencies upon a general 
plan of orderly marketing to which all interests 
will give hearty support and cooperation. Pres- 
ent selling agencies indicate that they do not have 
the authority or power to execute plans of orderly 
marketing which may be submitted. 



Committee of Fifteen Report 337 

Live stock producers have organized for the 
study of methods of production and for the pur- 
pose of solving local problems. The next step is 
to consider marketing of their products as of 
equal importance to the production of same. This 
can best be brought about through the cooperative 
selling agencies developed to such a point that 
they may direct the flow of live stock to the mar- 
ket. 

A plan of orderly marketing when proper sup- 
port can be given it by those who control the sell- 
ing of the major portion of live stock receipts will 
permit valuations to be created by demand in com- 
petition among buyers and will have the addi- 
tional value of regulating supplies, thus permit- 
ting a much greater return to producers. 

As the plans for orderly marketing develop it 
will be necessary to take into consideration not 
only the flow of live stock to the market but also 
the distribution of meat and by-products in an 
orderly manner through the various channels of 
trade. 

The welfare of the live stock industry is best 
served by the maintenance of fairly stable prices 
whereby marked daily fluctuations are avoided. 

Section 48. Orderly Marketing Principles, The 
committee believes that the accomplishment of the 
more orderly marketing of different kinds of live 



338 The Modern Farm Cooperative Movement 

stock is a long-time process. There is no easy- 
way of any outstanding shortcuts that will gain 
the desired end. 

There must be a broad campaign of education 
which stresses the ways and means to secure more 
orderly marketing of live stock. 

There must be dependable information as to all 
supplies, which information must be intelligently 
interpreted and put into use by live stock produc- 
ers and live stock shipping and marketing agen- 
cies, that have a genuine desire and willingness to 
cooperate for the good of all concerned. 

Organizations of large numbers of producers 
properly organized and conducted on a strictly 
cooperative plan are essential to real enduring 
success if the more orderly marketing of live stock 
is to be attained. 

The time of marketing is determined largely by 
the date that the preparation for market is begun. 
A complete system of orderly marketing must 
take into consideration the movement of stocker 
and feeder cattle, feeding sheep and lambs and 
stock hogs into feed lots and pastures. Some 
regulation of conditions and volume of production 
must ultimately come if orderly marketing is ac- 
complished. 

The early development and maintenance of effi- 
cient systems for the orderly marketing of live 



Committee of Fifteen Report 339 

stock, the principles governing which are herein 
outlined, shall be executed by the Board of Direc- 
tors of the National Live Stock Producers' Asso- 
ciation. 

Section 49. Essentials of an Orderly Market- 
ing Program. The essentials of an orderly mar- 
keting program are: 1. Reliable statistical in- 
formation is absolutely indispensable. Any plan 
of orderly marketing covering any kind of live 
stock must include accurate information covering : 

a. Number and classes of the diiferent kinds of 
live stock — cattle, sheep and swine in the country. 

b. Quantity of the above supply that is to be 
marketed, the time of marketing and the region 
from which it is to come. 

c. Market receipts with origin of same at all of 
the live stock markets covering various kinds, 
classes and grades of live stock — cattle, sheep and 
swine, together with their distribution into their 
various specific channels. 

The above statistics whenever possible should 
be based upon actual classified enumeration, 
otherwise upon careful estimates based upon ac- 
curate surveys of well-defined representative re- 
gions. 

It is recommended that the above information 
be secured through the U. S. Department of Agri- 
culture, the Secretaryof Agriculture establishing 



340 The Modern Farm Cooperative Movement 

the necessary organization in the Bureau of Mar- 
kets and Crop Estimates, cooperating with farm 
bureaus and other representative farm organiza- 
tions and live stock marketing agencies. 

2. There must be established definite methods 
for regulating the flow of various kinds of live 
stock toward the market in order to more equit- 
ably distribute the receipts. The method will dif- 
fer depending upon the different kinds of live 
stock involved. 

3. When the supply of live stock of any kind on 
the leading live stock markets threatens a short- 
age or excess of the daily or weekly requirements, 
pressure should be exerted by the terminal selling 
agencies to regulate country loadings and thus aid 
the market in recovering. 

4. There must be a working agreement with the 
railroads to insure the proper distribution of cars 
so as to carry out any plan of orderly marketing. 

Section 50. Live Stock Information. The Na- 
tional Live Stock Board of Directors should co- 
operate with the various existing live stock pro- 
ducers organizations in working out a system of 
orderly marketing. This Board should secure : 

1. A list of those who produce or handle live 
stock in carload quantities. 

2. A continuous record of the number on feed 
and on grass. 



Committee of Fifteen Report 341 

3. Information covering the probable length of 
feeding or grazing period. 

4. Information covering the particular class of 
live stock on hand. 

5. Information covering the place of marketing 
and the probable time of marketing. 

6. Information which may enable producers, 
feeders and graziers to market their live stock 
more intelligently. 

Section 51. Orderly Marketing of Hogs. The 
number of producers is so large and they are so 
widely scattered and the conditions of production 
are so varied that the intelligent distribution of 
shipments in the marketing movement of hogs is 
at present difficult. It is believed that organiza- 
tions of producers and the development of cooper- 
ative marketing agencies will tend to obviate 
many of these difficulties. 

Producers concentration yards shall only be 
established after a careful survey of conditions by 
the National Live Stock Board of Directors in co- 
operation with terminal marketing agencies, farm 
bureaus, farm bureau federations and cooperative 
shipping associations. When such concentration 
yards are deemed necessary they should be estab- 
lished by and under the supervision of the Na- 
tional Live Stock Board of Directors. 

Section 52. Orderly Marketing of Cattle. The 



342 The Modern Farm Cooperative Movement 

more orderly marketing of cattle is presented 
under three heads, fed cattle, range and pasture 
grass cattle, and butcher stock. The marketing 
of each of these classes is a problem in itself. 
Stockers and feeders are not considered in a sepa- 
rate group, as these classes are included with 
range and pasture grass cattle. 

Section 53. Fed Cattle. Fed cattle constitute 
a separate and fairly distinct problem in cattle 
production and marketing. The National Live 
Stock Board of Directors should bring about the 
close cooperation of terminal selling agencies, co- 
operative shipping associations, cattle feeders 
and organizations of live stock producers in such 
manner as to regulate to the greatest possible de- 
gree the operations in buying of feeders and the 
marketing of fed cattle. 

Section 54. Range Cattle. The outstanding 
problem in the orderly marketing of such cattle is 
to so move them that they will come to market in 
as fairly uniform volume as possible. 

To regulate the flow of these cattle to market 
and insure the best interests of the industry, the 
National live Stock Board of Directors should 
cooperate with cooperative live stock shipping as- 
sociations and terminal selling agencies and live 
stock producers and live stock orga^iizations in 
the rans^o torritorv in order to secure : 



Committee of Fifteen Report 343 

1. Direct from members in advance of the ship- 
ping season, reliable information as to the prob- 
able number and classes to be marketed with ex- 
pressed preference as to the time of marketing. 

2. The development of a general program of 
marketing which will insure that range cattle 
move to market in a well-distributed weekly vol- 
ume. 

Section 55. Pasture Grass Cattle. These cat- 
tle come from pastures in or adjacent to the corn 
belt. Where these are produced in well defined 
regions such as the Kansas Osage or flint hill pas- 
tures, Mineral Point, Wisconsin, and in blue grass 
regions, it is recommended that the National Live 
Stock Board of Directors cooperate with cattle 
graziers and producers live stock associations in 
these regions so as to regulate their market move- 
ments by distributing the runs in an orderly man- 
ner, harmonizing these movements with those of 
range cattle. 

Section 56. Butcher Stock. To gain accurate 
information as to the quality of cattle produced, 
numbers to be marketed and time of marketing 
offers extreme difficulty of fulfillment. As an in- 
creasing percentage of these cattle are shipped 
through cooperative shipping associations, it ap- 
pears that the organized regulation for the more 



344 The Modern Farm Cooperative Movement 

orderly marketing of butcher stock may logically 
come through these shipping associations cooper- 
ating with terminal selling agencies. 

Section 57. Orderly Marketing of Sheep. The 
more orderly marketing of sheep is presented 
under three heads : Fed Sheep and Lambs, West- 
ern Sheep and Lambs, and Native Sheep and 
Lambs. The marketing of each of these classes is 
a problem in itself. 

Section 58. Fed Sheep and Lamhs. The prob- 
lem of the orderly marketing of fed sheep and 
lambs is first of all a problem of feeding, because 
the time at which these lambs are put in the feed 
lot determines in a very large measure the time 
when they are to be marketed. 

The development of sheep feeding stations has 
resulted in a better distribution over short pe- 
riods, the good results from this system being 
especially marked with this class of live stock. 

The principles governing the more orderly mar- 
keting of fed cattle apply with equal emphasis to 
the more orderly marketing of fed sheep and 
lambs. 

Section 59. Western Sheep and Lamhs, The 
problem of the marketing of this class of live 
stock is similar to the marketing of range or west- 
ern cattle. The time of marketing is determined 
almost wholly by the conditions of production in 



Committee of Fifteen Report 345 

the different range states. The period when the 
market movement takes place is limited. 

The method that has been recommended for 
the more orderly marketing of range and pasture 
grass cattle offers a good guide for possible co- 
operative developments in the more orderly mar- 
keting of western sheep and lambs. 

Section 60. Native Sheep and Lambs, The 
National Live Stock Board of Directors should co- 
operate with the farm bureaus, cooperative ship- 
ping associations, terminal selling agencies and 
other organizations of sheep men in order to bring 
about an orderly movement of Native Sheep and 
Lambs to the market. 

TEANSPOETATION 

Section 61. The live stock transportation prob- 
lems are of sufficient importance to the producers 
to warrant the expenditure of the necessary effort 
and funds for the adequate protection of their in- 
terests. Abnormally high transportation rates 
discourage normal production and consumption 
on account of the effect on the returns to the pro- 
ducer and cost to the ultimate consumer. Inade- 
quate transportation service is injurious to the 
industry as a whole, as well as to the live stock 
being transported, resulting in smaller net re- 
turns to the shipper. 



346 The Modern Farm Cooperative Movement 

While various organizations representing the 
live stock interests have spent much time, money 
and effort to solve the transportation problems of 
live stock producers there still remain many diffi- 
cult transportation problems to be solved. 

Important transportation problems, including 
the following list, confront and handicap the live 
stock producer : 

1. Transportation rates, including rates on 
mixed cars and standard valuations. 

2. Train schedules. 

3. Heavy tonnage hauls including live stock 
shipments. 

4. Attendants with live stock shipments. 

5. Partitions for mixed cars. 

6. Loading station, pens, chutes, scales and 
other equipment. 

7. Providing of cars as ordered, whether single 
or double deck. 

8. Bedding of the cars. 

9. Delays between terminal yards and unload- 
ing chutes. 

10. Inspection, disinfection and loading of cars. 

11. Safe carload minima on straight and mixed 
cars. 

12. Feeding and watering enroute. 

13. Hot weather handling of hogs. 

14. Unloading at destination. 



Committee of Fifteen Report 347 

15. Handling of pure bred live stock. 

16. Priority of live stock shipments over dead 
freight. 

17. Prevention of discrimination in transporta- 
tion rates and otherwise against animals (horses 
and mules), used for farm power. 

These and other transportation problems and 
their solution may very properly be classified as 
local, district, intrastate, interstate, regional, na- 
tional and international in character, many of 
which overlap and dovetail together. 

These problems can best be solved by the Na- 
tional Live Stock Producers' Association assum- 
ing the responsibility and leadership in a thor- 
ough study and continuous effort through a prop- 
erly organized transportation department, and 
that it should seek the cooperation of the various 
farm organizations interested in the production 
and marketing of live stock. 

Section 62. It is therefore recommended, that 
the Board of Directors of the National Live Stock 
Producers Association, provided for in the plans 
submitted by the committee, be requested to give 
consideration to live stock transportation prob- 
lems at an early date and establish, as soon as 
practicable, a Transportation Department and re- 
quest it to cooperate with the American Farm Bu- 
reau Federation, the several producers terminal 



348 The Modern Farm Cooperative Movement 

commission associations, State Farm Bureau Fed- 
erations, and live stock organizations, including 
cooperative live stock shipping associations, and 
other farm organizations interested in live stock 
production. 

STATISTICS AND MAKKET KEPOETS 

Section 63. The Committee believes that: 

1. The Bureau of Markets and Crop Estimates 
can best collect the ordinary live stock statistics 
needed as a basis for intelligent production and 
marketing. The Committer recognizes that to 
adequately meet the needs it will be necessary to 
bring about a closer cooperation beween this Bu- 
reau, state departments, and farm and live stock 
organizations. 

Farmers and live stock producers should be 
willing to work for more liberal support of this 
Bureau as its work demonstrates its usefulness. 
The best interests of the Bureau of Markets and 
Crop Estimates will be served by remaining a 
part of the Department of Agriculture. 

2. The statistics gathered by the Department 
of Agriculture will need to be supplemented par- 
ticularly in the interpretation of the data, by sur- 
veys, by live stock marketing agencies, and farm 
and live stock organizations. In this \York the 



Committee of Fifteen Report 349 

National Live Stock Producers' Association 
should assume leadership and direction. 

EXTENDING THE MAEKET FOE MEAT 

Section 64. It is recommended that the Na- 
tional Live Stock Producers' Association, the cre- 
ation of which is recommended in this report, co- 
operate with the American Farm Bureau Federa- 
tion in giving the public a more wholesome and 
trustworthy appreciation of the value of meat and 
meat products in the diet. 

GENEEAL 

Section 65. It is anticipated that certain de- 
tails of this plan will require modification to meet 
the existing law in some states. 

Wherever the plan as herein outlined is in con- 
flict with such state law the same may be modified 
to meet the requirements by the National Live 
Stock Board of Directors. 

Section 66. It is recommended that the unfin- 
ished work of the Committee be turned over to the 
first Board of Directors of the National Live 
Stock Producers' Association when it is organized 
and in a position to take up such work and the 
Farmers' Live Stock Marketing Committee of 
Fifteen be then dissolved. 



APPENDIX D 

Minnesota Potato Exchange Contracts 

ASSOCIATION AGREEMENT 

(This is the contract entered into between the individual 
member and the local shipping association.) 

This Agreement^ made and entered into at 

on this day of 

A. D. 192...., between the..... .'. . 

formed 

under the laws of the State of Minnesota, having its principal 

place of business at in said State 

(hereinafter referred to as the Association), and 

a member of said Association, of 

in the County of , and State of Minne- 
sota (hereinafter referred to as the Grower). 

WITNESSETH;, that for and in consideration of the outlays in- 
curred and to be incurred by the Association in providing 
means and facilities for handling, storing, grading and mar- 
keting potatoes and other farm products, including the ex- 
pense to which it has been put in finding and organizing and 
establishing markets, and in further consideration of the 
mutual obligations of the respective parties hereto, it is hereby 
agreed as follows: 

1. That the Grower appoints said Association his agent for 
the purpose of handling, grading and marketing all the mar- 
ketable potatoes and other farm products such as 



Minnesota Potato Exchange Contracts 351 

grown by him, except what he may use for home consumption, 
for feed and seed, or sell in less than carload lots for local con- 
sumption and distribution. This shall be construed and ac- 
cepted to mean, that marketable potatoes must neither be sold 
or delivered to individuals or concerns, who make a business 
of collecting and shipping potatoes or other farm produce by 
carloads. And 

That the Grower will deliver his marketable potatoes and 
other farm products, herein contracted, at the Association's 

shipping station at in said State, in 

such quantities and condition, and at such times as the Asso- 
ciation or its agent and the undersigned Grower may agree 
upon, during the life of this contract. 

On or before July 1st of each year the Grower will report 
to the Association the acreage to be gro^vn by him that year, 
of potatoes and other farm products covered by this contract. 
If the Grower reports of vegetables, not specially mentioned 
above in this contract, such report shall be construed and ac- 
cepted to indicate his intention to include such product in his 
contract in the future, on the conditions and the terms cov- 
ered by this contract. During the growing season the Grower 
shall furnish such information concerning said potatoes and 
other farm products as may be requested by the Association. 

2. That either party may cancel this contract on the first 
day of July of any year, after giving notice in writing to the 
other party of the intention to do so, such notice to be given 
at least thirty (30) days prior to said date. Upon such no- 
tice, the Grower shall, prior to the first day of July pay any 
indebtedness then due from him to the Association, and de- 
liver his copy of said contract to said Association, and the 
same shall thereupon be cancelled; but such cancellation shall 
not affect auy incompleted sales or transactions accruing after 



352 The Modern Farm Cooperative Movement 

this contract, nor release the Grower from his obligation to 
sell through the Association, nor the Association from its 
obligation to handle all the potatoes and other farm products 
described in Section 1, which were grown during the preceding 
season. 

3. That harvesting, grading, inspecting, storing and ship- 
ping of the potatoes and other farm products shall be done 
in accordance with the by-laws and rules of the Association 
now in existence or hereinafter in effect. 

4. That all potatoes and other farm products delivered by 
the Grower may be marketed in assorted lots or with other 
potatoes and other farm products of like character and the 
proceeds of any or all shipments may be prorated with the 
proceeds of any other potatoes and other farm products of 
like variety and grade marketed by the Association, during 
such periods as the Board of Directors from time to time may 
determine. Provided that nothing in this paragraph, nor 
elsewhere in this contract, shall be construed to deny or 
abridge the right of the Grower to deliver to the Association 
for sale on separate account any potatoes or other farm prod- 
ucts that said Grower may elect to withhold from the above 
provided for pooling arrangements. 

5. That the Association shall have a lien upon the potatoes 
and other farm products hereby contracted by the Grower to 
be delivered to the Association, for any indebtedness of any 
kind owning by him to the Association, and any such indebted- 
ness shall be deducted out of the net proceeds of the sale of 
such potatoes and other farm products. 

6. That the Grower will not sell or otherwise dispose of his 
potatoes and other farm products covered by this contract 
(see also Section 1) to any purchaser except through the As- 
sociation, unless such potatoes and other farm products be 
rejected by the Association. In case the Grower is offered a 



Minnesota Potato Exchange Contracts 353 

price ill excess of the price then obtainable by the Association, 
he shall turn over such offer to the Association to be filled by 
it from said Grower's potatoes or other farm products covered 
by this contract. 

7. That the potatoes and other farm products covered by 
this contract shall be marketed by the Association whenever 
a market may be found which in its judgment, and in accord- 
ance with its by-laws and rules shall justify such marketing. 
The Association shall not be liable for any damage that may 
be sustained through the act of God or public enemy, or acci- 
dents in shipment or storage, or unavoidable failure to secure 
suitable storage or markets for the proper handling and stor- 
ing and marketing of said potatoes and other farm products. 
Any loss to any shipment occasioned by a grower through 
improper packing, grading or otherwise shall be borne by said 
Grower. 

8. That the Grower shall pay the Association its regular 
charges for its services, including handling, storing, shipping 
and marketing, which charges are to be fixed by the Board of 
Directors of the Association, and wliich shall be in amount 
sufficient to pay all expenses of rendering such services, in- 
cluding the overhead expenses of the Association. The Grower 
gives to the Association the right to deduct the amount neces- 
sary to cover such charges from the returns received for his 
potatoes and other farm products paying him the balance. 

9. That in case the Growler shall at any time fail to fulfill 
any of his obligations under the provisions of this contract, 
including the failure to deliver the said potatoes and other 
farm products to the Association as hereinbefore provided, any 
claims arising from such failure to meet his obligation, shall 
be a charge against the Grower's note, given by him to the 
Association in accordance with its by-laws, and 

23 



354 The Modern Farm Cooperative Movement 

That if the Grower fails or refuses to deliver to the Asso- 
ciation, for marketing and distributing the potatoes and other 
farm products required by this contract, he shall pay to the 
Association, as liquidated damages, an amount equal to the 
service charges of the Association as determined under Section 
8, for each cwt. of potatoes and other farm products not so 
delivered. Said sum may be deducted from any money in the 
possession of the Association due the Grower, and shall be a 
charge against the Grower's note as above provided. 

In Witness Whereof^ the said parties have executed this 

contract in duplicate, this day 

of , 192 

Association. 

By President. 

By Secretary. 

Grower. 



EXCHANGE AGREEMENT 

(This contract is entered into between the local shipping 
association and the Minnesota Potato Exchange.) 
This agreement was drafted by and has the approval of the 
M. S. Bureau of Markets. 

EXCHANGE AGREEMENT 

This Agreement,, made and entered into this 

day of , A. D. 19 between 

The Minnesota Potato Exchange, a corporation formed under 
the laws of the State of Minnesota, having its principal place 
of business at Little Falls, in the said State (hereinafter re- 
ferred to as the Exchange and the 

Association , .Minnesota, 



Minnesota Potato Exchange Contracts 355 

formed under the laws of the State of Minnesota (hereinafter 
referred to as the Association). 

WITNESSETH I That for and in consideration of the outlays 
incurred and to be incurred by the Exchange in providing 
means for the marketing and distribution of potatoes and 
other farm products controlled by the Association, including 
the expense to which it has been put for organizing and find- 
ing and establishing markets, and in further consideration of 
the mutual obligations of the respective parties hereto, it is 
hereby agreed as follows: 

1. That the Association appoints said Exchange its agent 
for the purpose of marketing and distributing all the potatoes 
and other farm products which shall be delivered to said As- 
sociation, for marketing and distributing by said Association, 
in such quantities and condition, and at such time as may be 
agreed upon between the Exchange and the said Association, 
during the year 1920 and every year thereafter continually. 
On or before the fii'st day of July of each year the Association 
shall report to the Exchange the acreage to be grown by its 
members that year of the potatoes and other farm products 
covered by this contract. During the growing season the As- 
sociation shall furnish such information concerning said pota- 
toes and other farm products as may be requested by the Ex- 
change. 

2. That either party may cancel this contract on the first 
day of July of any year by giving notice in writing to the 
other party at least thirty (30) days prior to said date of the 
desire to cancel this contract. Upon such notice, the Associa- 
tion shall, prior to said first day of July pay any indebtedness 
then due from it to the Exchange and deliver its copy of said 
contract to said Exchange and the same shall thereupon be 
cancelled, but such cancellation shall not affect any incompleted 



356 The Modern Farm Cooperative Movement 

sales or transactions between the parties hereto nor release 
either from any indebtedness then unpaid or thereafter ac- 
cruing under this contract, nor relieve the Association from 
its obligation to sell through the Exchange, nor the Exchange 
of its obligation to market and distribute, all the potatoes and 
other farm products described in paragraph 1 which were de- 
livered to said Association for marketing during the preceding 
season. 

3. That the grading, inspecting, marketing and distributing 
of the potatoes and other farm products shall be done in ac- 
cordance with the by-laws and rules of the Exchange now in 
existence or hereafter in eifect. 

4. That all potatoes and other farm products delivered by 
the Association may be marketed in assorted lots or with other 
potatoes and other farm products of like character and the 
proceeds of any and all shipments prorated with the proceeds 
of any other potatoes and other farm products of like variety 
and grade marketed by the Exchange, during such period as 
the Board of Directors from time to time may determine. 

5. That the Exchange shall have a lien upon the potatoes 
and other farm products hereby contracted by the Association 
to be delivered to the Exchange for any indebtedness of any 
kind owing by it to the Exchange, and such indebtedness shall 
be deducted out of the net proceeds of the sale of such pota- 
toes and other farm products. 

6. That the Association will not sell or otherwise dispose of 
its potatoes and other farm products covered by this contract 
to any purchaser except through the Exchange, unless such 
potatoes and other farm products be rejected by the Exchange. 
In case this Association is offered a price in excess of a price 
then obtainable by the Exchange, such offer shall be turned 
over to the Exchange to be filled from the potatoes or other 
farm products covered by this contract. 



Minnesota Potato Exchange Contracts 357 

7. That the potatoes and other farm products covered by 
this contract shall be sold and marketed by the Exchange 
wherever a market may be found which in its judgment and 
in accordance with its by-laws and rules shall justify such 
marketing. The exchange shall not be liable for any damage 
that may be sustained through act of God or public enemy, 
or accidents in shipments or storage, or unavoidable failure 
to secure suitable storage or market for the proper marketing 
and distributing of said potatoes and other farm products, 
Provided that the Board of Directors of the Exchange shall 
create such contingent funds as they deem necessary to protect 
the members of the Exchange against unavoidable losses. Any 
loss occasioned by the Association through improper handling 
or grading or otherwise shall be borne by said Association. 

8. That the Association will pay the Exchange its regular 
charges for its services, including shipping and marketing, 
which charges are to be fixed by the Board of Directors of the 
Exchange, and which shall be in amount sufficient to pay all 
expenses of rendering such service, including the overhead 
expenses of the Exchange and a contingent fund provided for 
in Section 7. The Association gives the Exchange the right 
to deduct the amount necessary to cover such charges from 
the returns received for its potatoes and other farm products 
paying the said Association the balance. 

9. That in case the Association shall at anj^ time fail to ful- 
fill any of its obligations under the provisions of this contract, 
including the failure to deliver the said potatoes and other 
farm products to the Exchange as hereinbefore provided, any 
claims arising from such failure to meet its obligations, shall 
be a charge against the Association's note, given by it to the 
Exchange in accordance with its by-laws, and 

That if the Association fails or refuses to deliver to the 
Exchange for marketing and distributing the potatoes and 



358 The Modern Farm Cooperative Movement 

other farm products as required by this contract, it shall pay 

to the Exchange as liquidated damages, the sum of 

cents for each cwt. of potatoes and other farm products not 
so delivered. Said sum may be deducted from any money in 
the possession of the Exchange due the Association. 

In Witness Whereof^ the said parties have executed this 
contract in duplicate. 

THE MINNESOTA POTATO EXCHANGE, 
By 

President. 

By 

Secretary-Treasurer. 

ASSOCIATION, 

By 

President. 
fl^ By o . . . 

Secretary. 



APPENDIX E 

Shipping Association Form 

FARMERS' SHIPPING ASSOCIATION 

CONSTITUTION 
Article I. 

This Association shall be known as the 

Shipping Association. 

Article II. 
The principal place of business and place of meetings of 

the Association shaU be 

; but the operations of the Asso- 
ciation may extend over and include adjacent shipping points. 

Article III. 

Subject to the approval of the board of directors, any 
farmer may become and be a member of this Association by 

the payment of a membership fee of , 

and annual dues in the sum of , beginning the 

next January first after becoming a member. And in this 
connection a farmer is defined to be one engaged in farming, 
or one who, retired from farming, is not engaged or interested 
in any business that conflicts with the business of this Asso- 
ciation. 

Article IV. 

The purposes of this Association are: (1) To ship out for 
its members and patrons live stock, grain, hay, wool and other 
farm products, and to obtain reasonable prices and the best 
possible results in the marketing of said products; and (2) 



360 The Modern Farm Cooperative Movement 

to obtain reasonable prices on, and ship in for its members 
and patrons, seeds, feeds, twine, salt, fertilizers, oils, lumber, 
building material, coal, fuel, farm implements, farm machin- 
ery and other farm supplies, including live stock. 

Article V. 

The business of this Association shall be under the control 

and management of directors, who shall 

be selected by ballot in annual meeting of the Association, 
or at a special meeting thereof called for the purpose. The 
directors shall be members of the Association, and they shall 
hold office for the term of one year and until their successors 
are elected and qualified, unless sooner removed by resignation, 
death or otherwise. 

Article VI. 

The officers of the Association shall be president, a vice 
president, and a secretary-treasurer. They shall be elected 
from the membership of the board of directors, and by said 
board, at the annual meeting of the board. Said officers shall 
hold office for a term of one year and until their successors 
are elected and qualified, unless sooner removed by resigna- 
tion, death or otherwise. They shall be officers of said board 
as well as of the Association, and shall respectively perform 
the duties that usually pertain to said offices respectively. 

Article VII. 
Vacancies in the office of the Association and in the mem- 
bership of the board of directors shall be filled by majority 
vote of the remaining directors at a regular meeting of the 
board, or at a special meeting called for the purpose; the 
terms of the incumbents thus elected to last only until the next 
annual meeting of the Association and the board, and until 
their successors are elected and qualified. 



Shipping Association Form 361 

Article VIII. 

The annual meeting of the Association shall be held on the 

of each year ; and at 

such meeting the board of directors shall render a full and 
true account of all business done by the Association during 
the preceding year. 

Article IX. 

The annual meeting of the board of direetoi's shall be held 
immediately following the annual meeting of the Association. 
Regular meetings of the board other than the annual meeting, 
also special meetings thereof, shall be held at such dates and 
times and on such calls as the board itself shall prescribe. 

Article X. 

Special meetings of the Association may be called at any 
time on majority vote of the directors, or on request signed by 
not less than one-fifth in number of the members of the Asso- 
ciation. Notices of any such meetings shall be mailed to each 
member of the Association at least ten days before the date 
of the proposed meeting. In case the president shall fail or 
refuse to call any such meeting, or in case the secretary- 
treasurer shall fail to mail the required notices promptly, a 
majority of the board of directors, or one-fifth in number of 
the members of the Association, may over their own signatures 
call such meeting and give the said ten days' notice thereof to 
the said members. 

Article XI. 

One-fifth in number of the members of the Association shall 
constitute a quorum for the transaction of business at all meet- 
ings of the Association. But a less number may adjourn to a 
subsequent date; in which case notice of such postponement 
shall be mailed to all members not less than five days imme- 
diately prior to the date set for the adjourned meeting. A 



362 The Modern Farm Cooperative Movement 

majority of the directors shall constitute a quorum for the 
transaction of business at all meetings of the board; but a less 
number may adjourn a meeting to a subsequent date. 
Aeticle XII. 

The board of directors shall appoint a manager who shall 
have charge of and manage the business of the Association, 
subject to the direction and control of said board. Such man- 
ager shall be required to furnish such bond for faithful per- 
formance of his duties as the board shall prescribe and ap- 
prove, or, in its discretion, the board may procure a surety 
bond for such manager at the cost of the Association. Said 
board shall not, however, have power to make a binding con- 
tract with a manager for a period longer than or beyond their 
own terms of office. Said manager shall receive such com- 
pensation as the board of directors shall by by-law fix, and 
shall at aU times be subject to removal or discharge for cause. 
And said board shall not have power to incur any financial 
obligations whatever that shall be binding on the Association, 
current and ordinary business expenses excepted. 
Article XIII. 

The officers of this Association shall at all times be subject 
to removal by the board of directors at any regular meeting of 
the board or at any special meeting thereof called for the 
purpose. And members of the board of directors shall at all 
times be subject to removal from that body by any special 
meeting of the association called for the iDurpose. 
Article XIV. 

For the purpose of maintaining this Association and de- 
fraying the expenses of operation, each shipper shall pay to 
the Association maintenance charges as follows on each ship- 
ment (whether outgoing or incoming) made by or for him 
through the Association : 



Shipping Association Form 363 

On grain, hay, wool and other farm products, not including 

live stock, cents for each 100 pounds or major fraction 

thereof. 

On feeds, seeds, twine, lumber, salt, coal, oils, implements, 

machinerj'- and other farm supplies, cents for each 100 

pounds or major fraction thereof. 

On live stock other than horses and mules, cents 

for each 100 pounds or major fraction thereof. 

On horses and mules, cents for each 100 pounds 

or major fraction thereof. 

Shippers shall also pay such additional charges as may be 
provided for in the by-laws of this Association. 

Article XV. 
The manager shall keep a strict account of all receipts and 
disbursements by him for the Association, and shall at all times 
promptly turn over to the secretary-treasurer any balances in 
money there may be in his hands, taking proper receipts 
therefor. And at the annual meeting of the Association he 
shall submit in writing a detailed statement of all business 
transacted by him for the Association for the year ending on 
the date of said meeting. 

Article XVI. 
Non-members as well as members of this association may, 
with the approval of the board of directors, employ the ship- 
ping services and facilities of this Association on the same 
terms as members. But they will have no voice or vote in the 
affairs of the Association; and before enjoying the Associa- 
tion's facilities they shall be required to register their signa- 
tures with the manager in acknowledgment of notice of all 
laws, rules and regulations of the Association and of their 
agreement thereto. 



364 The Modern Farm Cooperative Movement 

Article XVII. 

The board of directors may adopt such by-laws, rules and 
regulations not in conflict with this constitution as it shall 
deem necessary or proper to the carrying on of the business 
of this Association; and it may change, amend or repeal said 
by-laws, rules and regulations at pleasure. 
Article XVIII. 

These articles may be amended by a majority vote at any 
annual meeting of the Association, or by two-thirds vote at any 
special meeting called for the purpose. 
Article XIX. 

Until the next annual meeting of the Association, and until 
their successors are elected and qualified, the following named 
persons shall be the directors of the Association: 

Names. Postoffices. 



And until the next annual meeting of the directors the fol- 
lowing named persons shall be the officers of the Association, 
each for the office set forth opposite his name: 

, President. 

, Vice-President. 

, Secretary-Treasurer. 

BY-LAWS. 

Article I. — Shipping and Marketing Live Stock. 
Section 1. — Persons desiring to ship live stock with the Asso- 
ciation shall report to the manager the kind of stock, the num- 
ber of each kind and the approximate weight of each when 



Shipping Association Form 365 

ready to be marketed. When a sufficient amount has been 
reported to be ready for shipment to make a full carload the 
manager shall order a car for making the shipment and shall 
notify each person having stock listed, and state at what time 
the stock is to be delivered for loading. 

Section 2. — The manager shall be at the yard on the day a 
shipment is to be made (unless he shall have secured a substi- 
tute, for whose acts he shall be responsible), and shall receive 
all stock and weigh, mark and load the same. He shall have 
charge of and direct the sale of all shipments as instructed by 
the board of directors, and receive all remittances therefor and 
pay the same to the shippers, less all expenses incurred in mak- 
ing the shipment, including any outlay for materials needed in 
making partitions to separate the stock in the car, and for 
bedding, and including the maintenance charge mentioned in 
Article XIV of the Constitution, and also including the sink- 
ing-fund charge specified in Section 3 of these by-laws. He 
shall furnish a statement to every shipper, showing net weight, 
price received, expenses of shipment and terminal selling-com- 
mission and expenses. He shall keep on file all statements re- 
ceived from the terminal selling agency or commission firm 
that sells the live stock for this Association. And in a book 
provided for that purpose he shall keep a record showing the 
number of cars shipped and the amount of stock in each car. 

Section 3. — There shall be deducted for every hundred 
pounds (or major fraction thereof) in weight of live stock the 
sum of cents, and the same shall be placed in a sink- 
ing fund to be used for the payment of losses that may occur 
to any stock from the time it comes into the hands of the man- 
ager until final disposition of the same is made. 

Section 4. — Any shipper whose stock has been damaged or 
injured while in the hands of the manager shall receive the full 



366 The Modern Farm Cooperative Movement 

amount for the same as though the stock had not been injured^ 
but shall be subject to the same ratio of expense on the ship- 
ment. The payment of the damage shall be based on a. state- 
ment made by the selling agency or commission firm to whom 
the shipment is made, which statement shall show the amount 
received for the injured animal, and the amount that, in their 
opinion, it would have brought had it not been injured. This 
statement shall be the final basis for the settlement. No dam- 
age shall be paid for an animal which was not in a healthy 
condition when received at the local yards by the manager. 

Section 5. — All stock which must be sold subject to inspec- 
tion, except such as has been injured while in a healthy condi- 
tion and in charge of the manager, or any diseased animal, 
shall be received at the owner's risk, and he shall receive such 
payment therefor as is received by the selling agency or com- 
mission firm, less all expenses figured pro rata on the shipment. 

Section 6. — Should any shipper agree to ship his live stock 
and lists the same with the Association and thereafter fails 
to deliver his stock for shipment, and should such failure cause 
a loss to the Association on account of car not being loaded to 
the minimum weight, then and in that event such shipper shall 
be liable to the Association for the amount of said loss. 

Article II — Salary of Manager. 
The manager of this Association shall be paid a monthly- sal- 
ary not exceeding dollars. In case the net 

profits made by the Association for any month shall not be 
sufficient to pay said amount as salary for that month the said 
manager's salary for that month shall be no more than the 
amount of said net profits for said month; and in arriving at 
and determining the manager's salary or compensation for any 
given month the said salary itself shall not be counted or com- 
puted as expense or disbursement. 



APPENDIX F 

Corporation Form Under Cooperative Law 

ARTICLES OF INCORPORATION 

We whose names and residences are set forth herein, and 
whose names are hereto subscribed, hereby associate ourselves 
into a body corporate under the provisions of Chapter 1, 
Title IX, of the Code of Iowa, and acts amendatory thereof, 
particularly sections 1641-rl to 1641-r20 inclusive; assuming 
all the powers, rights and privileges granted bodies corporate, 
and all the duties and obligations imposed by said statutes, and 
being bound thereby, adopting the following Articles of Incor- 
poration, to-wit : 

Article I. 

The name of this corporation shall be 

Article II. 

Its principal place of business shall be , , 

in the County of and State of Iowa, with the 

right to maintain subordinate branches thereof anywhere with- 
in the State of Iowa. 

Article III. 

The object and purposes of the corporation are as follows: 
To buy, sell, sort, grade, ship, market and otherwise handle 
live stock, poultry, grain, hay, wool and other farm products; 
to store, mill, grind, distribute, ship, sell and otherwise handle 
grain and other farm products; to buy, sell, pack, can, manu- 
facture, prepare, store, distribute, ship, market and otherwise 



368 The Modern Farm Cooperative Movement 

handle meats, poultry and poultry products, milk and milk 
products, grain and grain products, fruits, vegetables and other 
farm and garden products ; to buy, ship in, house, sell, dis- 
tribute and otherwise handle lumber, building material, coal, 
fuel, feeds, tankage, seeds, fertilizers, farm implements, farm 
machuiery and all other articles and supplies used or needed 
by farmers engaged in farming, including lots or stocks of 
goods, wares and merchandise; and to mine and market coal 
and other minerals and mineral products. 

In carrying out its purposes the corporation shall have the 
right to acquire, erect, build, install, maintain and operate 
stock yards, market places, elevators, warehouses, grain and 
feed mills, abattoirs, packing plants, cold storage plants, ice 
plants, produce houses, creameries, canning factories, light and 
power plants, manufacturing and machinery plants, store 
buildings and structures for merchandise and farm supplies 
of all kinds, and all other facilities, conveniences, buildings, 
structures and equipments necessary or proper to the carrying 
out of the purposes of this corporation. 

This corporation shall have the right to acquire title by deed 
or lease to such real estate as may be necessary or proper in 
the carrying out of its purposes and in conducting its enter- 
prises. It shall have the right to hold, improve, mortgage, 
lease, sell, and convey such real estate. And it shall also have 
the right to take, accept, buy, sell, make, issue and execute con- 
tracts, notes, duebills, mortgages, leases and other obligations 
and evidences of indebtedness necessary or proper to the carry- 
ing out of its purposes and the conduct of its business. 
Article IV. 

The amount of authorized capital stock of this corporation is 

dollars, divided into 

shares of dollars each. 



Corporation Form Under Cooperative Law 369 

The corporation may commence business when not less than 
dollars in stock has been issued. 

No stock shall be issued until the corporation has received 
payment in full thereof at par, in cash or property; provided 
that when stock is to be issued for anything other than money 
the issuance must first be approved by the executive council of 
Iowa in accordance with the provisions amendatory of Section 
1641-b of the Code of Iowa. 

Shares of stock are transferable on the books of the corpo- 
ration ; but no one person or concern shall at any time be per- 
mitted to subscribe for, purchase or own to exceed 

dollars in par value of the capital stock; and no stockholder 
shall be permitted to sell or transfer his stock to another per- 
son or concern without first giving this corporation oppor- 
tunity to purchase the stock at its par value. 

The stock of this corporation shall be non-assessable. 

Article V. 

The corporate period of this corporation shall begin on the 
date the secretary of state issues a certificate of incorporation, 
and shall terminate at the expiration of twenty (20) years 

from said date, unless sooner dissolved by a 

vote of the stockholders at an annual meeting, or at a special 
meeting called for the purpose, or by unanimous consent as 
provided by law. All rights of renewal under the law, how- 
ever, are hereby reserved. 

Article VI. 

Annual meetings of the stockholders shall be held on 

of each year, at the principal place of 

business of the corporation. Each stockholder shall be notified 
of the time and place of each annual meeting by written or 
printed notice properly addressed and deposited in the post- 
24 



370 The Modern Farjii Cooperative Movement 

office by the secretary at least days immediately prior 

to the date of the meeting. 

Each stockholder shall be entitled to cast one vote on all 
questions presented at a stockholders' meeting, including the 
election of directors; and the voting power of a stockholder 
shall be limited to one vote, irrespective of the number of 
shares owned by such stockholder. 

Special meetings of the stockholders shall be called by the 
president upon written request signed by a majority of the 
directors or by not less than one-fifth in number of the stock- 
holders. The secretary shall give written or printed notice of 
any such meeting, specifying the time and place of meeting 
and the purpose thereof, and said notice shall be properly ad- 
dressed to each stockholder and deposited in the postoffice at 

least days immediately prior to the date of the meeting. 

In case the president or secretary shall fail or refuse to act 
promptly in response to said request the said majority of di- 
rectors or the said one-fifth in number of stockholders, as the 
case may be, may, over their own signatures, give notice of the 
meeting substantially as above. 

One-fifth in number of the stockholders, present in person, 
shall constitute a quorum for the transaction of business; but 
a less number may adjourn to fixed date, notice of which action 
shall be given to all stockholders, the notice being addressed 

and mailed to each stockholder at least days prior to 

the date fixed for the adjourned meeting. 
Article VII. 

The affairs of this corporation shall be managed and con- 
trolled by a board of directors, who shall be 

elected each year at the annual meeting of the stockholders. 
These directors shall be elected by ballot, and it shall require 
a majority vote of all stockholders present and voting to elect. 



Corporation Form Under Cooperative Law 371 

They shall hold office for one year and until their successors 
are elected and qualified, unless sooner removed by death, resig- 
nation or otherwise. No one not a stockholder is eligible to 
election as a director, and any director ceasing to be a stock- 
holder thereby forfeits his office as director. If vacancies occur 
in the board of directors from anj'^ cause the same may be 
filled by a majority vote of the remaining directors, and the 
persons thus elected to fill vacancies shall hold office until the 
next annual meeting and until their successors are elected and 
qualified. 

Annual meetings of the board of directors shall be held im- 
mediately following the annual meeting of the stockholders 
each year, and at the same place; and other regular meetings 
of said board shall be held on the 

Special meetings of said board may be held at any time on 

the call of the president or on call signed by or 

more of the directors, the notice of the proposed meeting being 
mailed or given to each director in ample time before the 
meeting. 

A majority of the directors shall constitute a quorum for the 
transaction of business, but a less number may adjourn a meet- 
ing to another date, in which case due notice of such action 
shall be mailed or given to the directors not present at the 
meeting where such action was taken. 

The office of any director failing to attend two consecutive 
regular meetings shall be declared vacant, unless such absence 
is excused by the board. 

Article VIII. 

The officers of this corporation shall be a president, a vice- 
president, a secretary, and a treasurer, all of whom must be 
directors, and all of whom shall be elected annually by the 
board of directors immediately after the annual meeting of 



372 The Modern Farm Cooperative Movement 

the stockholders. The election of said officers shall be hj 
ballot, and it shall require a majority vote of the directors to 
elect. Said officers shall hold their offices for one year and 
until their successors are elected and qualified, unless sooner 
removed by death, resignation or otherwise. If vacancies occur 
in any of said offices from any cause the same may be filled by 
a majority vote of the directors expressed by ballot as above 
specified. The offices of secretary and treasurer may be held 
by the same person, at the discretion of the board of directors, 
under the official title of secretarj^-treasurer. 

The president shall preside at all meetings of the stockholders 
and of the board of directors ; and shall sign all certificates of 
stock and warrants on the treasury. He shall also sign all 
contracts, bonds, notes, mortgages, deeds, leases and other in- 
struments in behalf of the corporation. At least one month 
prior to the annual meeting of the stockholders he shall ap- 
point a special committee of three stockholders to examine the 
books and accounts of the secretary, of the treasurer, and of 
any manager or agent of the corporation, and with the consent 
of the directors he may employ an accountant to examine and 
audit any or all of said books and accounts. And he shall sub- 
mit a full and complete report of the conditions and affairs of 
the corporation to the stockholders at each annual meeting. 
And the president shall perform all other duties usually re- 
quired of such an officer. 

In the absence of the president, or by reason of his inability 
to act, the vice-president shall preside at ail of said meetings 
and shall perform all other duties pertaining to the office of 
president. 

In the absence of both the president and vice-president at 
any of the said meetings a temporary presiding officer may be 
selected by the board of directors or by the meeting from the 
body of its membership. 



Corporation Form Under Cooperative Law 373 

The secretaiy shall give and serve proper and timely notice 
of all meetings of the stockholders and of the directors; shall 
keep a true record of the proceeding of all said meetings and 
of all official acts of the corporation ; shall countersign all cer- 
tificates of stock, deeds, leases, orders and other papers and 
instruments of the corporation, affixing to such papers and in- 
struments as may require it the seal of the corporation. He 
shall also keep a true and complete record of all stock issued, 
transferred, pledged or forfeited; shall pay over to the treas- 
urer immediately all money coming into his hands from the 
sale or issuance of capital stock or from other sources, taking 
the treasurer's receipt therefor; shall render to the directors 
whenever required by them a correct report of the business and 
affairs of the corporation, shall make a full and complete re- 
port of the condition, business and affairs of the corporation 
at each annual meeting of the stockholders ; and shall perform 
all other duties usually connected with such office. 

The treasurer shall have the custody of the funds and securi- 
ties of the corporation, shall deposit the same in the name of 
the corporation in such place of safe keeping as the board of 
directors may designate, and shall pay the same out only on 
warrants duly signed by the president and the secretary and 
duly attested by impression of the seal of the corporation. He 
shall from time to time make to the directors such reports as 
they may require; shall make a full and complete report at 
each annual meeting of the stockholders of the condition of the 
treasury and of his doings as treasurer; and shall perform 
all other duties usually attached to such office. 
Article IX. 

The treasui-er and such other officers, managers and agents 
of the corporation as the board of directors may determine 
shall be required to furnish to the corporation such bonds for 
the faithful performance of their duties as the board of di- 



374 The Modern Farm, Cooperative Movement 

rectors may prescribe and approve. Or in its discretion the 

board of directors may procure suitable surety bonds for all of 

said officers and agents, the cost thereof to be paid by the 

corporation. 

Article X. 

The board of directors may at any regular meeting of the 
board, or at any special meeting called for the purpose, adopt 
such by-laws, rules and regulations not inconsistent with these 
articles as it shall deem necessary and advisable for the carry- 
ing on of the business or the corporation or any of the several 
departments or branches of said business; such by-laws, rules 
and regulations to be subject to revision, change or repeal by 
the stockholders in annual meeting or at any special meeting 
called for the purpose. 

Article XI. 

No real estate belonging to this corporation shall be sold or 
conveyed except upon the order and under the direction of the 
board of directors. All conveyances of real property made by 
the corporation shall be executed by the president and counter- 
signed by the secretary with an impression of the corporate 
seal attached, and all releases of mortgages, liens, judgments 
or other claims that are required by law to be made of record 
may be executed by the president, the vice-president or the 
secretary of the corporation. 

Article XII. 

On the vote of a majority of the directors this corporation 
may borrow money from time to time for use in its business; 
but at no time shall the amount of the indebtedness of the cor- 
poration exceed two-thirds (%) of the paid-up capital stock. 
Article XIII. 

The private property of the stockholders of this corporation 
shall be exempt from execution for the debts of the corpora- 
tion. 



Corporation Form Under Cooperative Law 375 

Article XIV. 

On the 31st day of December of each year the board of di- 
rectors shall cause a complete inventory of the corporation's 
property to be taken and shall ascertain the profit or loss for 
the year ending on that date. 

Article XV. 

The board of directors shall employ a manager to have 
charge of the business affairs of the corporation, and may 
employ such other agents and employees as it shall deem neces- 
sary to the efficient carrying on of its business and any depart- 
ments or branches of said business that may be established; 
said manager, agents and employees, however, being at all 
times subject to the control of said board, and subject to re- 
moval or dismissal by said board at any time for cause. 

Said board shall fix the salaries or compensations of said 
manager, agents and employees. 

Said manager of the corporation shall be stockholder in the 
corporation, and may be officer or director thereof. 

The board of directors shall not have power to appoint or 
employ any manager, agent or employee of the corporation for 
a period longer than, or running beyond, the term of office of 
the directors themselves. 

Article XVI. 

The corporation shall at all times have a lien upon the stock 
held by any stockholder for any indebtedness on any account 
of said stockholder to the corporation. 
Article XVII. 

Subject to revision of their action by any general or special 
meeting of the stockholders, the directors shall by by-law ap- 
portion the earnings of the corporation in such manner, in 
accordance with law, as they may deem best for the conserva- 
tion of the interests of the stockholders and patrons of the 



376 The Modern Farm Cooperative Movement 

corporation. And the profits or net earnings of the corpora- 
tion shall be distributed to those entitled thereto, at such times 
and in such manner as the by-laws shall, in accordance with 
the statutes, prescribe. 

Article XVIII. 
This corporation shall have a corporate seal, which shall be 
a circular disc containing in the outer circle the name and 
address of the corporation, and in the center the words "cor- 
porate seal" with the year of organization. 

Article XIX. 
The corporation may amend its Articles of Incorporation by 
a vote of the stockholders at any regular stock- 
holders' meeting, or at any special stockholders' meeting called 

for that purpose on days' notice to all stockholders. 

Said power to amend shall include the power to increase or 
diminish the amount of capital stock and the number of shares ; 
provided the amount of capital stock shall not be diminished 
below the amount of paid-up capital at the time the amend- 
ment is adopted. . __ 
Article XX. 

Following are the names and places of residence of the per- 
sons forming this corporation until the next annual meeting 
of the stockholders following the date hereof, and until their 
successors are elected and qualified: 

Names. Residences. 



And the following named persons are hereby appointed and 
constituted the officers of this corporation, each for the office 
set forth opposite his name, until the next annual meeting of 



Corporation Form Under Cooperative Law 377 

the directors following the date hereof, and until their succes- 
sors are elected and qualified: 

Names. Offices. 

, President. 

, Vice-President. 

, Secretary. 

, , Treasurer. 

In witness whereof we have hereunto set our hands this 
day of ,19... 



State of Iowa 

Countj^ 

Be it remembered that on this day of 

19 . . , before me, a Notary Public in and for said county and 
state, personally appeared 



said persons being to me personally known to be the identical 
persons whose names are subscribed to the foregoing Articles 
of Incorporation, and each for himself acknowledged the exe- 
cution of the same to be his free and voluntary act and deed 
for the uses and purposes therein expressed. 

Witness my hand and notarial seal at , 

in the county of and State of Iowa, the 

day and year last above wiitten. 

Notary Public. 
My commission vdW expire , 19 . . . 



